Do you want to start a new adventure or improve one of your services? Remember to do a project feasibility study!
Did you know that 70% of projects started by companies fail? When it comes to running a business or developing an idea, you need to avoid leaping into the unknown. A failed project wastes your time and money, reducing the motivation of your employees.
This is where a feasibility study comes in! It allows you to determine the feasibility of the project you wish to invest in. You will know if it is technically feasible and economically justified.
How to do this study to ensure the success of your project? We give you all the keys!
What is a Project Feasibility Study?
A feasibility study involves evaluating the feasibility of a project. It is part of the initial design phase of any business plan and helps to objectively discover the strengths and weaknesses of an idea, a new service/product or a new business.
It can help in identifying and assessing the opportunities and threats present in the market, the resources required and the chances of success. As its name suggests, it aims to answer the question “Is it possible?” ,
For this the project feasibility study focuses on 5 main aspects:
1. Technical
The study determines whether the technical resources and expertise available to the organization can meet the requirements of the project.
2. Economic
This assessment usually includes a cost/benefit analysis of the project, which helps companies determine its feasibility. This section includes an analysis of the economic system of the country or countries where it is to be launched, as well as monetary, customs or fiscal policy.
In addition, economic valuation helps decision makers or investors to evaluate its return on investment.
3. Legal
A feasibility study determines whether any part of the proposed project conflicts with legal requirements. It also makes it possible to highlight compliance with contractual obligations or standards.
4. Operational
How does the project contribute to the achievement of your company’s strategic goals and business objectives? It is important that your new idea fits snugly into your current offerings, or that it matches the business model that you had when you started your activity.
5. Temporary
When will the project be completed? In this critical part of a project’s feasibility study, you determine the relevance of the established program. Does it fit your current operating time? You will need to address essentials such as your factory’s production capacity or additional workloads for your employees.
For this, the timing aspect will also help you determine whether hiring employees or freelancers is necessary, or whether you need to invest in equipment.
What are his interests?
Uncertainty remains a constant that companies prefer to avoid. Project feasibility studies are an opportunity to assess potential and estimate the probability of success or failure of your idea. It allows you to:
Guaranteed project success
Imagine a feasibility study of the project as the first step in preparing for your vacation. You don’t decide the date or place without checking the weather forecast first.
This study is similar. You evaluate the criteria that matter to the success of your project. These come from many sources and depend on the nature of your plan as well as the objectives.
reduce risk
The project feasibility study also identifies potential issues or obstacles that may hinder your success. You can find out how to get around them! And if that’s not possible, you’ll have all the keys to determining whether the returns are sufficient to offset the project’s level of risk.
get an overview
A feasibility study forces you to consider the big picture. It outlines the first plan which helps you to carry out its development more effectively.
Through their extensive inquiries, project feasibility studies let you discover trends, opportunities and solutions you may have never considered.
This allows you to identify weak points, improve the project, and possibly think of a plan B or C. In the event of a problem due to any uncertainty or constraint, you can react instinctively and save time as well as money.
better manage your resources
A new project can put increased pressure on one or more departments of your company, causing more harm than good to your overall business.
For example, the launch of a product will require significant planning and marketing strategy. Not to mention its production, invoicing, sales, warehousing and shipping departments, which will also face an additional workload.
You may have to choose between abandoning other profitable activities or accepting the redeployment of your available resources.
5 Steps to Do a Project Feasibility Study
An effective feasibility study determines the success of your project. To do it well, here are 5 steps to follow:
1. Start with the Initial Evaluation
If we go back to the vacation planning example, the first step is to select a vacation spot (before checking the weather). This initial evaluation includes 4 main steps:
- concept of thought : Describe what you hope to achieve by undertaking this project and why its success is important to your team or your company.
- evaluation of existing projects : Find examples of similar projects and analyze how they were executed (and their success).
- Check Your Competitive Advantage What would you do differently to guarantee the success of your project? What will be the differentiating element that serves your purpose?
- Risk Analysis Risk management is an essential part of assessing the feasibility of any project. Evaluate social, economic and legal standards that may cause discrepancies, delays or problems.
At the end of this preliminary analysis, you will know whether you should continue studying the feasibility of your project or whether you should revise your idea.
2. Answer Feasibility Questions
Now that you have an initial understanding of the ins and outs of your project, it’s time to create a development plan.
This plan will expand the objectives of the project by answering questions related to various aspects mentioned in the first part: economic, technical, legal, etc. Here are questions that will help you write it:
- Is this project technically feasible?
- Is this project legal?
- Is this project operationally viable?
- Is this project feasible within a reasonable time frame?
- Is this plan financially viable?
Using these 5 questions, you will describe the fundamentals of your idea, including the current situation or problem you want to solve, estimating the impact of the project and the means (material and human) needed to achieve it.
3. Conduct “Market Research”
The term is placed in parentheses, as not all projects require market research. If your plan is to improve the performance of a team, try a new management method, or implement new software for business productivity, you can skip this step.
On the other hand, if you are launching a new product/service, developing a new activity or if you want to review your offer, this step is important!
A market study will allow you to:
- Explore market opportunities for your project through focus groups, surveys and interviews with potential clients.
- Get to know your competitors including their products, services, marketing strategies, service methods and more.
- Get information about your target market: the size of the potential audience and their needs.
- Take advantage of an overview of the best ways to execute your project: time to completion, human needs, management style to be adopted…
- Imagine the criteria that guarantee the success (or failure) of the project, thanks to the history of the competitors.
To undertake this market study, you will be able to:
- Apply social listening strategies to the social networks of your competitors or similar companies.
- Join discussion groups on social networks like LinkedIn or Facebook.
- Conduct personal interviews with consumers or experts in your niche.
- Conduct polls and surveys with your potential customers.
Good to know: don’t choose one or the other method to get information. Focus groups and interview surveys provide more subjective data than social media listening or public domain data. Therefore it is ideal to collect a mix of subjective and objective data when you conduct your project feasibility study.
4. Analyze Risks
In the first step, you have listed the risks inherent in your project. Now is the time to go deeper into your analysis, identifying each significant threat. It aims to reduce or eliminate the risks that are deemed too high by introducing contingency plans and mitigation strategies.
Risk assessment may take into account:
- Level of Competition’s Impact on Your Project’s Success: It is always more difficult to win a market trusted by many competitors or by large groups.
- Current economic situation of the market: For example, starting a new project in the midst of a health pandemic was risky… Currently, rising gasoline prices can also become a risk if you depend on transportation.
- Reluctance of your teams: If this is an internal restructuring, consider examining your employees’ adoption of the project. It will be easier to set up if you have the support of your colleagues.
- Applicable Standards and Laws: How can you secure the project legally and in terms of contracts with your suppliers and service providers?
This list is not exhaustive. This varies depending on the nature of your project and the parties involved.
5. Estimate Financial Costs
Money remains the vein of war! Your project feasibility study should answer key financial questions, including:
- Will your financial resources come from your company or from an external financier?
- What is the break-even point of the project?
- How much budget do you need to complete the project?
- What will be the daily cost in case of delay in completion?
- What risks would it take to bear the very high financial cost?
- How is the cost distributed?
Good to know: It is always better to underestimate the cost of the project to reduce the risk of damage.
Our Tactic for Doing a Project Feasibility Study
If you need help evaluating the feasibility of the project or completing it, consider posting an ad on Codeur.com.
Our freelancers are there to support you in the success of your new idea!