Project Feasibility Report
Before embarking on a new business or an expansion project, a project feasibility study is quintessential to ascertain the viability of the project on various feasibility parameters like technical, financial, operational etc. In other words, a project feasibility study or report provides a window to envision the future of turning a business project into reality.
A project feasibility report is a detailed projection of the sustainability and operability of a proposed business project on certain key feasibility areas.
Technical feasibility study assesses the requirement and availability of technical resources, expertise, infrastructure and technologies involved in the execution of a project. This includes assessment of production technologies, physical business infrastructure like stores and warehouses, quality of raw materials, availability of required manpower, transportation solutions etc.
Financial or Economic Feasibility
There’s no point in carrying out a business project which is financially unsustainable or would turn out to be a loss-making one. That is why a financial or economic feasibility study is conducted to ascertain the viability of a project from a financial perspective. This study involves consideration of various critical financial factors like capital requirement and capital structure, cost and sources of capital, return on investment, repayment period, break-even analysis, cost analysis, working capital management etc.
Operational feasibility study assesses the operability and problem-solving abilities of a new project. This study tries to ascertain how smoothly a new project will run once it is implemented. It considers the organization structure, design, culture, processes and people.
Business or industry in any part of the world is regulated by the law of the land in which it operates. Various permissions and licenses from the concerned authorities are required to conduct business operations. Business operations may be also affected by specific regulatory restrictions. A legal feasibility study analyses the impact of legal and regulatory environment in the execution of a business project. This could include environmental laws, laws pertaining to anti-monopoly and restrictive trade practices, rules and regulations governing company registration and trade licenses, labour laws and so on.
Can the proposed project be completed within a time-frame necessary for it to fulfill its purpose? Project delays may also lead to cost escalation. Failing to make a project operational as per its schedule may render it ineffective and uneconomical. Schedule feasibility study analyses whether a project could be made operational within a reasonable and objective time-frame.
The targeted size of the market must justify the degree of efforts and investments involved in undertaking a new business project. Market feasibility study involves an extensive research and analysis of the general economic conditions and the concerned industry, market segmentation and total size of the market for the concerned product, competition and targeted market share and customer demographics.