Feasibility Studies for Projects
Feasibility studies should arrive at definitive conclusions on all the basic aspects of a project after consideration of various alternatives. Furthermore, the document provides a basic guide to feasibility information Investors need in order to evaluate the economic viability of a development.
- These conclusions and also any recommendations made regarding decisions or actions required from parties involved in the project should have explanations and support by compelling evidence in the feasibility study.
- From a planning point of view, feasibility involves research into the constraints and also opportunities evolving from the location, legal and planning aspects of potential sites as well as their physical characteristics.
As the name implies, a feasibility study is used to determine the viability of a project. Moreover, the objective of such a study is to ensure a project is legally and technically feasible and economically justifiable. It tells us whether a project is worth the investment by its promoters
Feasibility studies are useful to businesses in many ways. Some of the reasons organizations conduct feasibility studies are as follows:
- Not every project is doable based on the risk of the environment.
- It’s not necessary to take up every project. This will engage otherwise useful resources and block their use on other tasks.
- Not every project makes effective use of the resources of an organization
But What is a Feasibility Study?
In simple terms, a feasibility study involves making a judgment call on whether a project is doable. The two criteria to judge feasibility are cost required and value delivered. A well-designed study should offer a historical background of the business or project, a description of the product or service, accounting statements, details of operations and management, marketing research and policies, financial data, legal requirements and tax obligations. Generally, such studies precede technical development and project implementation.
A feasibility study evaluates the project’s potential for success; therefore, perceived objectivity is an important factor in the credibility of the study for potential investors and lending institutions. [Source: Wikipedia]