Feasibility study

Determination of the likelihood that a proposed product or development will fulfill the objectives of a particular investor. For example, a feasibility study for a proposed housing subdivision should: (1) estimate the demand for housing units in the area; (2) estimate the Absorption Rate for the project; (3) discuss legal and other considerations; (4) forecast Cash Flows; and (5) approximate investment returns likely to be produced.

A determination of the likelihood that a proposed development will fulfill the objectives of a particular investor.
Example: A feasibility study of a proposed Subdivision should:

• estimate the demand for housing units in the area

• estimate the Absorption Rate for the project

• discuss legal and other considerations

• forecast Cash Flows

• approximate investment returns likely to be produced

A feasibility study is a detailed analysis of a company and its operations that is conducted in order to predict the results of a specific future course of action. Small business owners may find it helpful to conduct a feasibility study whenever they anticipate making an important strategic decision. For example, a company might perform a feasibility study to evaluate a proposed change in location, the acquisition of another company, a purchase of major equipment or a new computer system, the introduction of a new product or service, or the hiring of additional employees. In such situations, a feasibility study can help a small business's managers understand the impact of any major changes they might contemplate.

"Conduct a feasibility study to start your course of action," consultants Judy Capko and Rebecca Anwar suggested in an article for American Medical News. "It will provide you with objective information to evaluate existing services and strengths. You will gain an understanding of the competition and marketplace indicators that affect your [business]. This is the best way for you to grasp the impact of future decisions you may be considering. The feasibility study will help you accurately anticipate what will and will not work in varied situations. You will be able to determine what resources are essential to complete varied situations and gain an understanding of how to draw on your strengths."

Steps in Conducting a Feasibility Study

The main objective of a feasibility study is to determine whether a certain plan of action is feasible—that is, whether or not it will work, and whether or not it is worth doing economically. Although the core of the study is dedicated to showing the outcomes of specific actions, it should begin with an evaluation of the entire operation. For example, a good feasibility study would review a company's strengths and weaknesses, its position in the marketplace, and its financial situation. It would also include information on a company's major competitors, primary customers, and any relevant industry trends. This sort of overview provides small business owners and managers with an objective view of the company's current situation and opportunities. By providing information on consumer needs and how best to meet them, a feasibility study can also lead to new ideas for strategic changes.

The second part of a good feasibility study should focus on the proposed plan of action and provide a detailed estimate of its costs and benefits. In some cases, a feasibility study may lead management to determine that the company could achieve the same benefits through easier or cheaper means. For example, it may be possible to improve a manual filing system rather than purchase an expensive new computerized database. If the proposed project is determined to be both feasible and desirable, the information provided in the feasibility study can prove valuable in implementation. It can be used to develop a strategic plan for the project, translating general ideas into measurable goals. The goals can then be broken down further to create a series of concrete steps and outline how the steps can be implemented. Throughout the process, the feasibility study will show the various consequences and impacts associated with the plan of action.

In most cases, a feasibility study should be performed by a qualified consultant in order to ensure its accuracy and objectivity. To be able to provide a meaningful analysis of the data, the consultant should have expertise in the industry. It is also important for small businesses to assign an internal person to help gather information for the feasibility study. The small business owner must be sure that those conducting the study have full access to the company and the specific information they need.

Further Reading:

Capko, Judy, and Rebecca Anwar. "Feasibility Studies Can Help You Control Your Destiny." American Medical News. September 23, 1996.

Jones, Seymour, M. Bruce Cohen, and Victor V. Coppola. The Coopers and Lybrand Guide to Growing Your Business. New York: Wiley, 1988.

"Weigh the Benefits, Consider the Costs." Dallas Business Journal. June 23, 2000.

This article is incomplete and may require expansion or cleanup. Please help to improve the article, or discuss the issue on the talk page.

For other uses, see Feasibility study (disambiguation).

If a project is seen to be feasible from the results of the study, the next logical step is to proceed with it. The research and information uncovered in the feasibility study will support the detailed planning and reduce the research time.

Contents 1 Five common factors (TELOS) 1.1 Technology and system feasibility 1.2 Economic feasibility 1.3 Legal feasibility 1.4 Operational feasibility 1.5 Schedule feasibility 2 Other feasibility factors 2.1 Market and real estate feasibility 2.2 Resource feasibility 2.3 Cultural feasibility 3 See also 4 References 5 External links

Five common factors (TELOS)

Technology and system feasibility

The assessment is based on an outline design of system requirements in terms of Input, Processes, Output, Fields, Programs, and Procedures. This can be quantified in terms of volumes of data, trends, frequency of updating, etc. in order to estimate whether the new system will perform adequately or not this means that feasibility is the study of the based in outline.

Economic feasibility

Economic analysis is the most frequently used method for evaluating the effectiveness of a new system. More commonly known as cost/benefit analysis, the procedure is to determine the benefits and savings that are expected from a candidate system and compare them with costs. If benefits outweigh costs, then the decision is made to design and implement the system. An entrepreneur must accurately weigh the cost versus benefits before taking an action. Time Based: Contrast to the manual system management can generate any report just by single click .

Cost Based: No special investment is needed to manage the tool. No specific training is required for employees to use the tool. Investment requires only once at the time of installation. The software used in this project is freeware so the cost of developing the tool is minimal

Legal feasibility

Determines whether the proposed system conflicts with legal requirements, e.g. a Data Processing system must comply with the local Data Protection Acts.

Operational feasibility

Is a measure of how well a proposed system solves the problems, and takes advantages of the opportunities identified during scope definition and how it satisfies the requirements identified in the requirements analysis phase of system development.^[1]

Schedule feasibility

A project will fail if it takes too long to be completed before it is useful. Typically this means estimating how long the system will take to develop, and if it can be completed in a given time period using some methods like payback period. Schedule feasibility is a measure of how reasonable the project timetable is. Given our technical expertise, are the project deadlines reasonable? Some projects are initiated with specific deadlines. You need to determine whether the deadlines are mandatory or desirable.

Other feasibility factors

Market and real estate feasibility

Market Feasibility Study typically involves testing geographic locations for a real estate development project, and usually involves parcels of real estate land. Developers often conduct market studies to determine the best location within a jurisdiction, and to test alternative land uses for a given parcels. Jurisdictions often require developers to complete feasibility studies before they will approve a permit application for retail, commercial, industrial, manufacturing, housing, office or mixed-use project. Market Feasibility takes into account the importance of the business in the selected area.

Resource feasibility

This involves questions such as how much time is available to build the new system, when it can be built, whether it interferes with normal business operations, type and amount of resources required, dependencies, etc. Contingency and mitigation plans should also be stated here.

Cultural feasibility

In this stage, the project's alternatives are evaluated for their impact on the local and general culture. For example, environmental factors need to be considered and these factors are to be well known. Further an enterprise's own culture can clash with the results of the project.

See also

Mining feasibility study

Matson, James. "Cooperative Feasibility Study Guide" United States Department of Agriculture. Rural Business–Cooperative Service. October 2000.

References

1. ^ Bentley, L & Whitten, J (2007). System Analysis & Design for the Global Enterprise. 7th ed. (p. 417).

External links

The Wikibook Professional and Technical Writing has a page on the topic of Feasibility studies

• Hoagland & Williamson 2000
• United Nations Industrial Development Organization (UNIDO)
• UNIDO Manual for the Preparation of Industrial Feasibility Studies
• Matson
• Allan Thompson 2003
• Westar Trade Resources

This entry is from Wikipedia, the leading user-contributed encyclopedia. It may not have been reviewed by professional editors (see full disclaimer)