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How to use a feasibility study in project management

Blog: Monday Project Management Blog

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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 can help streamline the process.

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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:

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:

Real estate

In the real estate industry, brokers and agents might use feasibility studies to:

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:

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How to use 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 Work OS has numerous useful features that simplify the process. For example:

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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:

  1. Start with a preliminary analysis that screens for any insurmountable obstacles or roadblocks
  2. Prepare a projected income statement
  3. Conduct a market survey
  4. Plan business operations and organization in detail
  5. Prepare a balance sheet for opening day
  6. Review and analyze all the data you’ve collected
  7. 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 Work OS can make feasibility studies easier by allowing for more efficient management and unrivaled customization.

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