WHAT IS FEASIBILITY STUDY? |MEANING | DEFINITION | CHARACTERISTICS AND PROCESS

‘What is a feasibility study might?’ sound like a simple question but when faced with the reality of carrying out a feasibility study, one quickly realizes how demanding and complex it is to conduct a feasibility study. Feasibility study is probably one of the most used phrases in businesses and business schools.

Yet not very many people really understand what a feasibility study is. This article written to concisely discuss what the phrase is and also to give a step by step simple approach that can be followed when the situation at hand required that an insight is sought into a proposed project(s).

MEANING | DEFINITION | EXPLANATION OF FEASIBILITY STUDIES

Except for those that love failures, no one embarks on a business journey without taking out time to appraise the business idea in the light of other investment opportunities that abound. However you look at it, all the process and activities that you got yourself involved in during this planning time is what is commonly referred to as ‘feasibility studies’.

The only difference-which makes all the difference-, is that feasibility study is a systematic activity. Good managers understands that it is better to invest little extra time on the drawing board than waste the whole year trying to reverse a costly mistake.

For the purpose of this article, feasibility study is defined as those clearly articulated moves that are made by management of an enterprise in the bid to; gather information, analyse the information, interpret the information, then make a decision based on the outcome of the process.

TEN (10) TYPES OR FORMS OF FEASIBILITY STUDIES

Since the main objective of a feasibility study is to reasonably uncover strength, weaknesses, opportunities and threats, its focus and aim will be on virtually all aspects of a business- call it SWOT analysis if you want. However, below are listed the most common studies that are being carried out by both firms and individuals.

• Economic feasibility
• Legal feasibility
• Implementation feasibility
• Technological feasibility
• Logical feasibility
• Market feasibility
• Financial (profitability)
• Ethical | Moral feasibility
• Time horizon feasibility
• Environmental feasibility

FEATURES AND CHARACTERISTICS OF FEASIBILITY STUDIES

The two most important aspects of a feasibility study are the cost of carrying out operations and the value that will be gained from the operation. Hence, any worthwhile study will have both the ability to reduce cost and increase or add value to an existing or potential business. Thus the following are features and characteristics of feasibility study:

• Very Articulate
• Highly Systematic
• Focused
• Strategic in nature
• Cost effective
• Value adding
• Organised
• Flexible

HOW TO CONDUCT A MEANINGFUL AND SENSIBLE FEASIBILITY STUDIES

In this section if this article, we will be looking at the steps involved in performing a result oriented feasibility study. Note that the order of the steps can be altered depending on your unique business need. Seat back, grab a cup of coffee while we explore this interesting simple steps of doing a feasibility studies.

TWELVE (12) SIMPLE STEPS NEEDED TO START AND FINISH A FEASIBILITY STUDY

1. ESTABLISH THE AIM AND OBJECTIVE OF A STUDY: The starting point of anything worth doing is usually from asking soul searching questions in a bid to establish the true motivation behind the intended action. Performing a feasibility study is an action triggered by need(s). The aim and objective of carrying out a feasibility study should never be in doubt.
2. DRAW UP A STRATEGIC MAP TO FOLLOW: It is very easy to be distracted if a researcher carrying out a feasibility study fail to have a strategic map that acts like a compass to direction the whole process of conducting a feasibility study. The whole activities involved in the process must be nicely integrated into congruent whole.
3. CARRYOUT ECONOMIC OR COMMERCIAL VIABILITY ANALYSIS: Although the main reason behind doing a feasibility study is to determine the economic viability of a potential major project, it is common best practice to perform a kind of preliminary early study to gain insight into whether it is worthwhile investing more resources into a venture.
4. INTRICACIES ANALYSIS (TECHNICAL AND FUNDAMENTAL ANALYSIS): The intricacies of an adventure needs to be analyzed up front so as to determine if the full feasibility study will be completed. It will be a complete waste if one starts a journey only to realize half way he or she highly underestimated the process.
5. HUMAN RESOURCE ANALYSIS: Based on the findings from the intricacies analysis conducted above, an in-house check will be done to see if the organization has the right mix of human talents to see the exercise to finish.
6. ANALYSE COMPETITION: During the course of the feasibility study, you must take into consideration the existing and anticipated competitions that the proposed project might face.
7. EVALUATE THE POTENTIAL LOCATION: A lot of people make the mistake of ignoring the fact that location of a business really matters. I know that the advent of business technologies and general advancement in technologies has significantly improved the level of globalization. 
8. FINANCIAL EVALUATION: It is all about the money. What else if not for the money. A feasibility study of any weight must have adequate financial and business analysis coverage. This is also an opportunity to further strengthen the business case for the project under consideration. 
9. WHAT IF ANALYSIS (SENSITIVITY ANALYSIS): There is always of possibility that something will go wrong in any business endeavor. incorporating some level of what if analysis into your feasibility study is a sensible thing to do. 
10. EVALUATE AND ANALYSE MARKETING AND SALES STRATEGIES: At the very least, a bird eye view overview of what marketing strategies are in place to ensure that the future project that would come out of the project will be adequately taken to the end users. Remember to have a look into the logistics and supply chain management  that would be used in the project.
11. QUERY YOUR OPERATIONAL CAPABILITY: This is similar to what needs to be done at the intricacies analysis stage where probing questions are asked in a bid to expose any potential hidden future obstacle. A project analyzed to have massive upside potentials will come to nothing if the business realizes that it does not have what it takes to operationalize the deal.
12. LEGAL AND ENVIRONMENTAL ANALYSIS: The legalese of the intending business environment of the proposed project being analyzed must be well captured in the document. 

SECTIONS OR COMPONENTS OF A FEASIBILITY STUDIES REPORT

Just like a business plan, a good feasibility report must have structure and components. Below are bulleted components of an FS.

• Executive summary
• Historical background or background information
• Proposed activities or operations (including financial projections)
• Comparison of prevailing system and the proposed system
• Timetable for the project
• Final recommendation and conclusion

PITFALLS OF FEASIBILITY STUDIES TO AVOID

In as much as the process of feasibility study revolves around reaction of value and avoidance of costs, certain caveat has to be observed else, the whole system will crumble. Some of the things that we must look out for are:

• Signs of over investment of resources
• Reliability of the service provider i.e. the reputation of the researcher
• Avoid releasing too much information to third party
• Avoid staying too long on a study
• Watch the action of your competition

Remember that the importance of ethics in this process of conducting a feasibility study and writing a report afterwards cannot be overemphasized. The process has to be transparent and realistic for it to make any sense to both investors and lenders.