How to use a feasibility study in project management
Blog: Monday Project Management Blog
Making decisions can be challenging, especially when those decisions can have a significant, lasting impact on the future success of your company. In project management, it’s crucial you understand how to determine which projects are worthwhile. To do this, you may be using tools like scheduling software and workflow charts in order to understand deadlines, staffing requirements, and necessary resource allocation.
If a feasibility analysis isn’t already in your decision-making repertoire, now is the time to include one. With a feasibility study, you can more accurately determine any project’s return on investment (ROI) to help fuel smarter decisions.
In this article, you’ll learn how to conduct a feasibility study and why you should do so. You’ll also learn about some industries that use feasibility reports and how monday.com can help streamline the process.
What is a feasibility study?
A feasibility study determines how practical a proposed project, plan, or method is. Although it’s most often used in project management, you can conduct a feasibility study to test a new business idea or even the operational feasibility of a change in workflow for an existing business.
Using feasibility studies to accurately compare the cost-benefit of any proposal can significantly improve your decision-making abilities by giving you all the information you need to confidently give a project the go-ahead — or not. But how does a feasibility study work to accurately understand the potential successes of project proposals?
How does a feasibility study work?
A feasibility study looks at all applicable information, studies, data, and other relevant resources to determine the viability of a proposed project or venture. For most businesses, a feasibility study will primarily be based on financial implications like ROI.
A project manager will review and analyze the man-hours, tools, technology, and other resources necessary to complete the project successfully. Then, using market research, they’ll see what the financial projections are most likely to be in terms of incoming cash flow.
One way to determine whether a project is worthwhile is by seeing if the ROI is positive. However, a feasibility study isn’t solely based on financial implications, since not every benefit your company receives from a project is monetarily qualitative. Other factors are also taken into consideration. For example:
- How will the community or your customers respond to this plan or project?
- How might the plan improve your company’s operations moving forward?
- What are the non-financial pros and cons associated with this plan?
- Are there other aspects specific to your industry that you need to consider?
Feasibility studies offer a comprehensive understanding of the risks and benefits associated with any given project plan. They can also identify points of vulnerability within a proposed project.
What are some industries that use feasibility studies?
Most industries can benefit from using feasibility studies. That said, this valuable decision-making tool is most commonly used in project management, real estate, and the food industry.
Project management
As a project manager, you might use a feasibility study to:
- Determine viability: Using a feasibility study, you can accurately determine whether a proposed product and service is viable based on financial implications and how your target audience will respond. Defining the risks, benefits, and financial implications of proposed plans and projects can help fuel more confident decision-making.
- Understand time feasibility: Finances aren’t the only thing you’ll need to be concerned with as a project manager. You’ll also need to consider whether the time investment from yourself and your team members is worthwhile.
- Understand technical feasibility: Do you have the tools and technology necessary to bring a plan to fruition? If not, do you have the financial and time resources required to implement a new tool or technology?
Real estate
In the real estate industry, brokers and agents might use feasibility studies to:
- Determine legal requirements: A feasibility study can help determine if the legal requirements of a bid, sale, purchase, or development project are within the realm of possibility. If they are, the feasibility study can further determine whether those legal requirements can be met while retaining a profit.
- Decide if a purchase is worthwhile: When deciding if a purchase is financially beneficial, a feasibility study can be used to compare the costs of buying, renovating, and potential upkeep until sale.
- Understand whether development is possible: Potential land development projects have many moving parts and considerations. A feasibility study can determine if a development project is possible and if it will be financially prosperous for the real estate company and its client.
The food industry
Feasibility studies work a little differently in the food industry because they focus on financial and community implications. For example, you might use a feasibility study to:
- Decide if expanding is worthwhile: Not every location is ideal for every restaurant type. Food industry executives and buying managers can use feasibility studies to determine if a single potential new location is a financially solid choice. Alternatively, these studies can be used to compare two or more potential new venues to see which makes the most business sense.
- Help expand menus: In terms of community implications, a food industry feasibility study might be used to determine what new menu items should be added based on client feedback. These studies can also be used to determine whether a restaurant’s audience would have a positive reaction to a proposed menu item.
How to use monday.com to easily create and execute a feasibility study
Creating a thorough feasibility study that will help you make better-informed decisions can be challenging. Thankfully, the monday.com Work OS has numerous useful features that simplify the process. For example:
- Collaborate with team members in real time: Our Work OS facilitates real-time collaboration so you can keep the ball rolling on your feasibility study without roadblocks, from conception to completion.
- Save all your important documents with workdocs: monday.com’s workdocs feature lets you store, organize, and track your most important feasibility study documents. You can have all your reports, case studies, and more on hand when you need them most to save time.
- Use Gantt software to track the progress of your feasibility study: Gantt software can help you track your timeline to completion. Alternatively, you can use it to create a theoretical representation of a proposed project or plan to see if you can make it work.
- Compare and contrast information on customizable dashboards: Our dashboards are customizable, so you can choose the information you most want to see. Compare and contrast to help fuel final decisions on your feasibility study.
The difference between a feasibility study and a business plan
Feasibility studies are filled with calculations and analyses for proposed projects. Estimated projections for business costs versus returns play a vital role in these studies. The final goal of a feasibility study is to decide whether a proposed project, plan, or idea is possible and worthwhile.
On the other hand, business plans are detailed outlines of how a business can be grown. You’ll generally find tactics and strategies alongside some projections inside a business plan. The final goal of a business plan is to help an organization grow, expand, or succeed as a startup.
Frequently asked questions about feasibility studies
How much does a feasibility study cost?
The cost of a feasibility study can vary significantly based on a variety of factors, including your location, who is conducting the study, and what the study is for. Generally, having someone within your company perform the feasibility study is the most cost-effective option. Using outside sources can cost thousands of dollars.
What is a feasibility study relative to a business plan?
A feasibility study can be used to determine whether a proposed project is viable. If it is, a business plan can then be used to map out your organization’s future steps.
How to do a feasibility study
To do a feasibility study, you should:
- Start with a preliminary analysis that screens for any insurmountable obstacles or roadblocks
- Prepare a projected income statement
- Conduct a market survey
- Plan business operations and organization in detail
- Prepare a balance sheet for opening day
- Review and analyze all the data you’ve collected
- Decide whether a proposed project or plan is worthwhile or not
Customize and manage feasibility studies with ease
A feasibility study is a valuable decision-making tool that can help you improve your organization’s future success. However, conducting a thorough feasibility study alone can be challenging and tedious based on the amount of research, data, and detail involved. The monday.com Work OS can make feasibility studies easier by allowing for more efficient management and unrivaled customization.
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