Feasibility study

Feasibility study is done before an idea is approved or implemented. It is not a marketing proposal but rather an unbiased, factual inspection of what the idea means for the business. It examines multiple aspects of the idea, such as its potential market, initial and ongoing investment needs, staffing and equipment requirements, impact on current business operations, competition, marketing schemes and profit expectations in the short and long term. The study also identifies potential risks and defines mitigating solutions. This is an important element of feasibility studies, because addressing shortcomings while an idea is still on paper is more cost effective than after it is in production. This helps prevent unplanned costs, delayed schedules and lost customers.

Feasibility reports for complex technical ideas requiring large investments are more sophisticated than straightforward, low risk ones. In general, a feasibility report should address the marketing, technical, financial and organizational aspects of the idea and its positive and negative outcomes for the business.

You should provide a feasibility report in the following format:

  • Product: A general statement of the product; give a brief description of what the proposed system will do, highlighting where the proposed system meets the specified business requirements of the organisation.
  • Technical Feasibility: Will the proposed system perform to the required specification? Outline technical systems options you propose to use, which will give a technical solution satisfying the requirements and constraints of the system, as outlined in the terms of reference.
  • Social Feasibility: Consideration of whether the proposed system would prove acceptable to the people who would be affected by its introduction. Describe the effect on users from the introduction of the new system; consider whether there will be a need for retraining the workforce. Will there be a need for relocation of some of the workforce? Will some jobs become deskilled? Will the current workforce be able to perform effectively any new tasks introduced by the proposed system? Describe how you propose to ensure user co-operation before changes are introduced.
  • Economic Feasibility: Consider the cost/benefits of the proposed system. Detail the costs that will be incurred by the organisation adopting the new system; consider development costs and running costs. Detail benefits that the new system will bring, direct economic benefits such as reduced costs, and indirect benefits, such as improved management information and better customer service. Illustrate the cost/benefit of the new system by applying a suitable cost/benefit analysis method such as the payback method.
  • Market Research: A comprehensive market research identifying a need for the product. Detail all market research you carried out, listing sources of information. Justify any conclusions you have drawn from your research. Identify the potential customer base for your product, together with evidence of customer need for the product. Describe how you propose to compete with similar products on the market.
  • Alternative Solution: Consideration of alternative solutions should be documented. At least two alternative business or technical systems options should be considered. Detail the differences between these options and the proposed system. Justify your choice of the proposed system and the reasons for rejecting the alternative options.

At this point, all of the planning for the project has been done and if the feasibility study has shown that the project is likely to succeed within its constraints, then it only remains for us to start the requirements analysis and thus proceed with the project.