Faculty of Engineering

PED 452 Feasibility Study

Topic (2)
What is Feasibility Study
 Outline

• Introduction
• Types of Feasibility
• Contents of a Feasibility Study
• Who Will Conduct The Study?
• How Will You Monitor The Progress of The Study?
• How To Accept or Reject The Study?
• How To Use The Study Results?

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 Introduction

• A feasibility study is a detailed analysis that

considers all the critical aspects of a proposed
project in order to determine the likelihood of it
succeeding.
• Feasibility study is used to discern the pros and
cons of undertaking a project before they invest a
lot of time and money into it.

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 Introduction
• Some of key benefits from conducting a feasibility
study are:
• Provides critical information to decide whether to
pursue, modify, or abandon a business idea
• Helps identify potential risks and challenges and develop
strategies to overcome them
• Determines if the necessary resources (time, money,
and personnel) are available for the venture
• Provides critical data and projections that can be
presented to investors to secure funding
• Helps to focus the efforts of the business team on the
most viable aspects of the idea
• Enhances the success rate through evaluating multiple
parameters

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 Introduction

• A feasibility study is valuable when:

• Starting a new business
• Expanding of an existing business
• Purchasing an existing business

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 Types of Feasibility

• Market Feasibility
• Examines market demand, target audience,
competition, and market share to determine
commercial feasibility

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 Types of Feasibility

• Technical Feasibility
• Assesses the details of how you will deliver a
product or service (materials, labor, transportation,
where your business will be located, technology
needed,…etc.)

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 Types of Feasibility

• Managerial Feasibility
• Involves the capability of the infrastructure of a
process to achieve and sustain process
improvement
• May also include professional background
information about the founders and principals of
the business and what skills they can contribute to
the business

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 Types of Feasibility

• Financial Feasibility
• Involves projecting revenues and expenses,
itemizing startup and operating costs, and
identifying potential funding sources

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 Types of Feasibility

• Cultural Feasibility
• Deals with the compatibility of the proposed
project with the cultural environment of the project

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 Types of Feasibility

• Environmental Feasibility
• Assesses a project’s potential environmental impact
and outlines measures to mitigate negative effects.
It also ensures alignment with environmental
regulations and your organization’s sustainability
goals

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 Types of Feasibility

• Legal Feasibility
• Reviews any legal requirements, permits, and
regulations that the business must comply with.

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 Contents of a Feasibility Study

• The most common feasibility study should include

the following sections:
• An Executive Summary
• Description of Product or Service
• Technology Considerations
• Product or Service Marketplace
• Identification of Specific Market
• Marketing Strategy
• Organizational Structure
• Schedule
• Financial Projections

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 Who Will Conduct The Study?
• If you plan to do a feasibility study, you will want to
strongly consider hiring a consultant to conduct the
study.
• You are responsible for choosing the proper
consultant to fit your needs.
• For help in choosing which consultant to hire, think
about:
• Positive reviews from previous clients
• Solid experience
• Creative problem-solving skills
• Excellent communication skills
• Make careful decisions

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 Who Will Conduct The Study?
• When selecting a consultant for a feasibility study, it is
often recommended that you send a Request for
Proposals (RFP) to prospective consultants, outlining
what you want to be done.
• A consultant can respond to an RFP by describing how
the study will be conducted, what questions will be
answered by the study, a timeline for completing the
analysis and how much it will cost.
• When selecting a consultant from among those
responding to the RFP, first identify which ones provide
the type and quality of answers needed to adequately
assess your business idea. Then select the consultant
who can provide the required analysis for the least
cost.

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 How Will You Monitor The Progress of The Study?

• Hiring a consultant does not deny your

responsibility for ensuring that the feasibility study
is conducted properly.
• A member of the project committee or a small
group of members can be selected to work with the
consultant.
• Selected member(s) will:
• Represent the project committee’s needs to the
consultant
• Review and clarify what is needed from the consultant
• Monitor the work of the consultant
• Provide periodic reports to the project committee
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 How To Accept or Reject The Study?

• The consultant will provide the project committee

with a draft of a final report.
• Before starting discussing the conclusions of the
feasibility study, the study should be reviewed first
to determine if it is accurate, relevant, and
complete. It is not uncommon for the project
committee to reject the draft of the report and ask
for further clarification and analysis

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 How To Accept or Reject The Study?

• Before you accept the feasibility study results you

should determine that it:
• Is understandable and easy to read
• Is logically consistent within sections and among
sections
• Contains all the relevant information
• Addresses all the relevant issues and questions
• Lists and discusses all the underlying assumptions of the
project analysis
• Is thoroughly researched using good research
techniques
• Meets the expectations of the project committee

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 How To Use The Study Results?

• The purpose of the feasibility study is to provide

the information needed to determine if the
proposed business venture is viable.
• Carefully assess the conclusions of the study and
decide if the proposed business venture has
sufficient merit to move forward.

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 How To Use The Study Results?

• Common mistakes made at this stage are:

• Because of the lack of clear direction from the feasibility
analysis, committee members find they cannot bring
themselves to decide. Rather, they continually seek more
information.
• The committee members have already made up their minds
and rationalize the study results to fit their decision.
• The committee members become confused by the array of
information presented to them and pressure their consultants
to give conclusive answers of whether to move forward with
the project. When committee members respond to questions
pertaining to why they moved forward with a project by
replying, “our consultants said it would work”. This means
that they are abdicating their decision-making responsibility.

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 References

• [Link]
• [Link]
• [Link]
to-do-a-feasibility-study
• [Link]

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