A feasibility study is a tool used to assess the value, plausibility, and potential of a project. A feasibility study involves an in-depth exploration of all aspects of the project to determine an objective idea of the costs, benefits, and risks involved. It MUST be thorough, unbiased and objective to determine that the project is realistic and has potential.
The five (05) key areas of a feasibility study are technical, economic, legal, operational, and scheduling feasibility.
Technical feasibility.
Focuses on the technical resources available and the hardware, software, and other technology requirements of the proposed project, i.e. service delivery, proximity to transportation nodes, etc. Technical feasibility is carried out to determine whether the owner has the capability, in terms of software, hardware, personnel and expertise, to handle/manage the completion of the project.
Economic feasibility.
Economic analysis is the most frequently used method for evaluating the effectiveness of a new project. More commonly known as cost/benefit analyses, the procedure is to determine the benefits and savings that are expected from a candidate project and compare them with costs before financial resources are allocated to the project.
Legal feasibility.
Investigates to ensure no aspects of the project are conflicting with legal requirements such as zoning laws.
Operational feasibility.
Operational feasibility is a measure of how well a proposed project solves the problems and takes advantage of the opportunities identified during scope definition.
Scheduling feasibility.
Scheduling feasibility looks at the estimated time the project will take to complete. It is a measure of how reasonable the project timetable is. Given the required technical expertise, are the project deadlines reasonable? Some projects are initiated with specific deadlines. It is necessary to determine whether the deadlines are mandatory or desirable.
Other Feasibility Factors.
Market feasibility.
Market Feasibility takes into account the importance of the business in the selected area.
Resource feasibility.
This involves questions such as how much time is available to build the new project, when it can be built, whether it interferes with normal business operations, type and amount of resources required and dependencies.
Cultural feasibility.
In this stage, the project’s alternatives are evaluated for their impact on the local and general culture.
Financial feasibility.
Financial viability can be judged on the following parameters;
- Total estimated cost of the project,
- Financing of the project in terms of its capital structure and debt equity ratio,
- Projected cash flow and profitability.
When these areas have been examined, the feasibility study will identify constraints to the proposed project such as technical, budget, laws and regulations, etc.
In investment engineering, a high-quality feasibility study lays a foundation for the rational allocation of financial or other resources, protecting the business from making unreasonable decisions, for some common mistakes at this stage can be very expensive. Preparation of the Feasibility Study requires a strong background both in the technical and financial aspects of the project. The perceived objectivity of the evaluation is an important factor in the credibility placed on the feasibility study by potential members, lenders, and other interested parties. For this reason, it is important to hire a consultant with no formal ties to the project, equipment manufacturers, or marketers, so an unbiased evaluation of project operating potential and efficiency can be made. At SANKOFA, we duly meet this criteria, and thus offer impeccable and plausible solutions, on account of our joined-up thinking backed by technical insight.