What is the Purpose of a Feasibility analysis report?
A feasibility study is a crucial initial step in launching a new business venture. It conducts a thorough analysis of the potential success of the proposed business. The main objective of a feasibility study is to provide valuable insights that will assist business owners in making informed decisions about their new venture.
The feasibility analysis report addresses crucial questions about the proposed business, including:
• Who is the target audience for this business?
• Who are the competitors in this market?
• What are the expenses involved in starting and operating this business?
• What are the potential benefits and challenges associated with this venture?
• What is the estimated revenue this business can generate?
• What are the projected profits and losses for this business?
• What are the growth prospects for this industry?
Types of Feasibility Study
- Technical Feasibility: This involves assessing whether your organization has the necessary technical resources and capabilities to successfully execute the project. It assesses the availability of technology, the expertise of the staff and the capacity of the infrastructure to support the project.
- Economic Feasibility: This involves evaluating the financial aspects of the proposed project to determine its feasibility. It is a process of determining the potential financial benefits and costs of the project and comparing them to determine whether the project is financially viable. One way to perform this assessment is by conducting a cost-benefit analysis, which compares the projected costs of the project against the expected financial benefits. This helps in determining whether the benefits outweigh the costs and if the project is worth pursuing.
- Legal Feasibility: This involves examining the compliance of the proposed project with the relevant laws and regulations. It is a process of assessing the legal requirements and constraints that apply to the project's activities and deliverables. It involves evaluating the legal implications of the project and identifying any potential legal risks or barriers that may affect the project's success. The goal of legal feasibility is to ensure that the project is in compliance with all applicable laws and regulations and that it is legally permissible to execute it.
- Operational Feasibility: Operational feasibility refers to the degree to which a project aligns with an organization's capacity, resources, goals, and objectives in terms of its ability to be successfully implemented.
- Time Feasibility: Time feasibility involves assessing the amount of time needed to complete a project and establishing deadlines. It also includes evaluating how the project's schedule aligns with ongoing operations, including but not limited to demand forecasting and production scheduling. This helps to ensure that the project can be completed in a timely and efficient manner without disrupting current operations.
What Is Included in a Feasibility analysis report?
The findings of your project feasibility study are compiled in a feasibility report that usually includes the following elements.
- Executive summary
- Description of product/service
- Technology considerations
- Product/service marketplace
- Marketing strategy
- Financial projections
- Findings and recommendations
Importance of Feasibility Study
Conducting a feasibility study is crucial for organizations that aim to optimize their resources, time, and budget before committing to a project. The study can provide valuable insights that may lead to changes in the project's scope, and it's better to make these determinations beforehand rather than encounter issues later on. Furthermore, a feasibility study offers a thorough understanding of the proposed project, providing stakeholders with a clear picture of what to expect. This can help to ensure that the project is viable and has a greater chance of success.
Below are some key benefits of conducting a feasibility analysis report:
- Improves project teams’ focus
- Identifies new opportunities
- Provides valuable information for a “go/no-go” decision
- Narrows the business alternatives
- Identifies a valid reason to undertake the project
- Enhances the success rate by evaluating multiple parameters
- Aids decision-making on the project
- Identifies reasons not to proceed
Sections to include in a feasibility analysis report
The content of a feasibility report can vary depending on the specific requirements of an organization. However, in general, most feasibility reports include several key sections that provide a comprehensive overview of the proposed project. The key sections are discussed below:
- Executive summary - The executive summary, which typically appears as the first section of a feasibility study, provides a concise overview of the project and its key elements.
- Introduction - The introduction, which usually follows the executive summary, provides a more detailed description of the project and its goals. It explains the nature of the problem or opportunity that the project aims to address, as well as any constraints or limitations that need to be taken into account.
- Evaluation criteria - Evaluation criteria help readers understand the various factors that need to be considered when evaluating the project. These criteria may include but are not limited to financial costs, legal and tax implications, public perception, environmental impact, resource requirements, and other relevant considerations.
- Evaluation of solutions - It serves the main goal of the feasibility report, which is to evaluate the feasibility of different options and project plans. This section should provide a detailed analysis of the various alternatives that have been considered, including an assessment of their pros and cons.
- Conclusion - The conclusion is the final section of a feasibility study and it summarizes the key findings and recommendations from the report. It should provide a clear and concise overview of the project's feasibility and its potential impact on the organization.
- Final recommendation - The recommendation section, as the name suggests, provides the final and best course of feasibility report action based on the evaluations and analyses presented in the preceding sections of the feasibility report. This section should be written in a clear and concise manner and should provide a clear and actionable plan for moving forward with the project. When considering the launch of a new project or product, feasibility reports are essential. They are critical in making informed decisions before committing resources, time and budget to a project. Feasibility reports provide a comprehensive assessment of the proposed project, and this allows the organization to make a well-informed decision. The report should be considered as an investment and should be reviewed thoroughly from pre-planning to conclusion.
- A feasibility study is a document that assesses the practicality and potential success of a proposed project or solution.
- The purpose of the report is to provide valuable insights that will assist decision-makers in determining if the proposed project or solution is viable and worth pursuing.
- The report addresses crucial questions about the proposed business, such as the target audience, competitors, expenses, potential benefits and challenges, estimated revenue, projected profits and losses, and growth prospects for the industry.
- There are several types of feasibility studies including technical, economic, legal, and operational and time feasibility.
- A feasibility report includes elements such as an executive summary, description of the product/service, technology considerations, product/service marketplace, marketing strategy, organization/staffing, schedule, financial projections, and findings and recommendations.
- Conducting a feasibility study is crucial for any new business venture as it helps in making informed decisions and avoiding costly mistakes.