Feasibility Study of a Project: How and Why To Carry It Out
Qatar stands as one of the world’s most prosperous countries in the World, and it’s always welcoming new businesses, the feasibility study of a project is an inherent element of all of them. It does not matter if it is a software initiative, an educational project or a construction one. Analyzing the viability of a project is more important than planning and to be able to conclude it, it is essential to carry out a complete investigation, leading to the knowledge of whether the project will really bring the benefits that are expected of it. It is not a simple bureaucratic formality, but a necessary tool for strategic decision making.
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To carry out a feasibility study for a project, it is necessary to gather enough information to:
- Identify the limitations, restrictions and assumptions.
- Detect opportunities
- Analyze the current mode of operation of the organization.
- Define the requirements that make up the project.
- Evaluate the different alternatives.
- Reach an agreement on the line of action.
The structure of a feasibility study for a project
A feasibility study for a project to be effective, it must have, at least, the following six parts:
- Scope of the project helps to define the limits and avoid deviations that distance from the expected results.
- It alludes to the purpose and is used to define the problem of the company that needs to be solved or the business opportunity that it wants to take advantage of.
- You must define the scope of application in a clear, concise and precise way, to avoid confusing the project participants.
- It has to inform about the structure and parts of the company, including the designation of the participants in the project, the identification of the promoter and the areas of the end users affected by it.
- Situation analysis serves to identify the strengths and weaknesses of the current approach.
- It helps to better understand the system and understand the development mechanisms of each deliverable.
- It facilitates the introduction of changes in the areas where they are required.
- It allows defining guidelines that can be applied to future projects, assuming considerable savings in time and money. It should be used as a road map and not as a call to action, so its conclusions must be framed in the planning and not be taken as priorities to be resolved immediately.
- Definition of requirements this stage depends on the object of the project’s attention and is nourished by the joint participation of project members at different levels.
- Determination of the approach that represents the recommended solution or optimal course of action that will conclude in the satisfaction of needs.
- It is essential to assess the different solution alternatives to each problem.
- The suitability of the use of existing structures and alternatives is considered.
- Priorities are established based on their pragmatism and viability.
- Evaluation of the viability of the project examines the profitability of the selected approach.
- Start with an analysis of the total estimated cost of the project.
- The cost of other alternatives is also calculated, apart from the recommended solution, in order to offer an economic comparison.
- Should be completed with a project program that shows the route of the project and the start and end dates of the activities as a whole.
- Ends with the calculation of the total cost, essential aspect to be able to determine the viability of a project.
- To this calculation, we must add a summary of the costs and evaluation based on a cost-benefit analysis and the profitability of the investment.
- Review of the feasibility study of a project all the above elements are assembled in a feasibility study that must undergo a formal review in which all the parties involved participate. This exam has two purposes:
- Justify the rigor and precision of the feasibility study.
- To make a decision about the projects, approving it, rejecting it or requesting a revision of it or any of its aspects.
We must remember that the feasibility study of a project is more a way of thinking than a bureaucratic process. To increase its usability, it is important that it contains enough details to allow continuing with the next successive phase in the project, facilitating the application of a comparative analysis in the preparation of the final project audit that evaluates what is delivered, compared to what was proposed in the feasibility study.
Reasons to carry out a feasibility study for a project
In addition to the common sense approach that the feasibility study of a project contributes to its planning, there are many other reasons that encourage companies to commit to its development. The realization of a study of this type is a good business practice and its application can be observed in all successful businesses. The organizations with the lowest levels of project failure have in common having dedicated the time and resources necessary to thoroughly examine all the issues and evaluate their probability of success before starting the next project. In addition to minimizing the risk, the feasibility study helps them:
- Focus on the project itself and get a more complete perspective of the different alternatives.
- Discover new business alternatives or ways to optimize results.
- Identify opportunities to innovate, through the research process.
- Detect the signs that warn that it is better not to continue and the reasons that justify this caution.
- Increase the probability of success when discovering the different factors that, from the beginning, could affect the project and harm its results.
- Have quality information to carry out decision making based on objective and reliable data.
- Have complete documentation, the result of thorough research that the company has carried out in different areas.
- Ensure the financing of credit institutions and other monetary sources.
- It also helps to attract capital investment, one of the most applauded benefits of the feasibility study of a project.
How can we help you?
The very first question comes in your mind that how BusinessBOX can help you in your feasibility study for the coming project. So we clear you that we take enough time to listen to you talking about your business goals and needs. Our clients are often surprised by the possibilities we present to them. When you give us the responsibility to advise you, we are committed to take care of your business as our business. To get more details, get in touch with us or send us an email on [email protected].