FEASIBILITY STUDY

This study is concerned with the first four phase of

capital budgeting, viz, planning, analysis, selection
and financing and involve market, technical,
financial, economical and ecological analysis.
A feasibility study is an evaluation of a proposal
designed to determine the difficulty in carrying out
a designated task. Generally, a feasibility study
precedes technical development and project
implementation

Generation of Ideas
Initial
Screening
Is the idea prima Facie Promising
No

Yes

Plan feasibility study

Conduct Market
Analysis

Terminate

Conduct Technical Analysis

Conduct Financial
Analysis
Conduct Economic & Ecological
Analysis
Is the Project
Worthwhile
Yes

Prepare Funding
Proposal

No

Terminate

Key factor
A key factor in any feasibility study
must be ensuring that you are
dealing with correct facts, correct
assumption, and up to date financial
data.

Preliminary investigation
When complex problems or
opportunities are to be defined, it is
generally desirable to conduct a
preliminary investigation called a
feasibility study.
The primary objectives of the
feasibility study is to assess three
types of feasibility
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Types of feasibility Study

1. Technical feasibility
can a solution be supported with the
existing technology or not?
2. Economic feasibility
is the existing technology cost effective?
3. Operational feasibility
Will the solution work in the organization
if implemented?
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The Components of a Feasibility

Study
1.Description of the Business: The product
or services to be offered and how they will
be delivered.
2.Market Feasibility: Includes a description
of the industry, current market, anticipated
future market potential, competition, sales
projections, potential buyers, etc.
3.Technical Feasibility: Details how you will
deliver a product or service (i.e., materials,
labor, transportation, where your business
will be located, technology needed, etc.).
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continue
4. Financial Feasibility: Projects how much
start-up capital is needed, sources of
capital, returns on investment, etc.
5. Organizational Feasibility: Defines the
legal and corporate structure of the
business (may also include professional
background information about the
founders and what skills they can
contribute to the business).
6. Conclusions: Discusses how the business
can succeed. Be realistic and honest.
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Feasibility Study
A Feasibility Study is the analysis of a
problem to determine if it can be
solved effectively.
The results determine whether the
solution should be implemented.
This activity takes place during the
project initiation phase and is made
before significant expenses are
engaged.
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Feasibility includes
1.
2.
3.
4.
5.
6.
7.
8.
9.

Project name
Problem or opportunity definition
Project description
Expected benefit
Consequence of rejection
Resource requirements
alternatives
Other consideration
Theorization

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Five common factors

(TELOS)
1. Technology and system
feasibility
2. Economic feasibility
3. Legal feasibility
4. Operational feasibility
5. Schedule feasibility

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1. Technology and
system feasibility
The assessment is based on an outline design of
system requirements in terms of Input, Processes,
Output, Fields, Programs, and Procedures.
This can be quantified in terms of volumes of
data, trends, frequency of updating, etc..

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2. Economic feasibility
Economic analysis is the most frequently used
method for evaluating the effectiveness of a
new system. More commonly known as
cost/benefit analysis, the procedure is to
determine the benefits and savings that are
expected from a candidate system and
compare them with costs.

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3. Legal feasibility
Determines whether the proposed
system conflicts with legal
requirements, e.g. a data processing
system must comply with the local
Data Protection Acts.

15

4. Operational feasibility
It is a measure of how well a
proposed
system
solves
the
problems, and takes advantages of
the opportunities identified during
scope definition and how it satisfies
the requirements identified in the
requirements analysis phase of
system development.
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5.schedule feasibility
Schedule feasibility is a measure of
how reasonable the project
timetable is. Given our technical
expertise, are the project deadlines
reasonable?

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1. Executive Summary
The executive summary provides an overview of the
content contained in the feasibility study document.
2. Description of Products and Services
This section of the feasibility study provides a high
level description of the products and/or services which
are being considered as past of the feasibility study
3. Technology Considerations
This section of the feasibility study should explain any
considerations the organization must make with regards
to technology. Many new initiatives rely on technology
to manage or monitor various business functions. New
technology may be developed internally or contracted

4. Product/Service Marketplace

This part of the feasibility study describes the

existing marketplace for the products and/or
services the organization is considering. It may
describe who the target market consists of for these
products or services, who the competitors are, how
products will be distributed, and why customers
might choose to buy our products/services.

5. Marketing Strategy

Here the feasibility study provides a high level

description of how the organization will market its
product or service. Some topics which should be
included are: how does an organization differentiate
itself from its competitors; types of marketing the

6.Organization and Staffing

With many new products or services there may be
a need for additional staffing or for an organization
to restructure in order to accommodate the change.
7. Schedule
This section of the feasibility study is intended to
provide a high level framework for implementation
of the product or service being considered
8. Financial Projections
The financial projections for the feasibility study
provides a description of the financial projections

9. Findings and Recommendations

This section of the feasibility study template
provides an area where to summarize the findings
of the feasibility study and explain why this course
of action is or is not recommended. This section
may include a description of pros and cons for the
initiative being considered.