Importance of doing a feasibility study

Question

What is the importance of doing feasibility study before embarking on a new project?

Answer

The importance of a feasibility study has been debated within many companies for years. By conducting a proper feasibility study, project managers can determine the viability of a proposal, business venture or idea. The principal function of this is to determine if the project will continue or not (Marino 2012). The two criteria used to judge feasibility are cost required and value to be 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 (Mukund 2016). Additionally, you can have knowledge of trends because a feasibility study looks at the present-day market and studies the anticipated growth of your target business sector. A feasibility study can better help a business and a project manager in deciding if the business venture will be profitable. However, it should be noted that the effectiveness of a feasibility study could be limited by uncertainty. Expected expenditure and revenues included in projections are totally dependent on future estimations.

References

Marino, J. A., (2012) Why a Feasibility Study is Important for any Business. Available at: http://www.trumanmox.com/why-a-feasibility-study-is-important-for-any-business Mukund (2016) Feasibility Study – An Important aspect of Project Management. Available at: http://www.simplilearn.com/feasibility-study-article