The Importance of Project Feasibility Study

Table of Contents

Definition of Key Terms

Types of feasibility studies

Why a feasibility study in project managemen

Determining the profitability or viability of a projec

Quantification of benefits and costs

Comparing of alternatives and selecting the best alternative

Identification of Target Beneficiaries

Finding out whether a project is needed

Designing a relevant marketing strategy

Identification of potential challenges or problems

Conclusion

References

Introduction

A feasibility study occupies a place of importance in contemporary project management. Decisions on whether to go ahead with a project and whether the intended beneficiaries will benefit from a project are informed by findings that emanate from a feasibility study. A feasibility study also helps project managers to determine whether a project is viable and select the best alternative from an array of alternatives that can address the identified problem. The feasibility study is one of the critical activities that are done at the first stage, the conceptualization phase of the project cycle. Therefore the feasibility study must be done meticulously so it generates appropriate and relevant information that will help project managers and stakeholders to make informed decisions on a given project. It must also be borne in mind that failure by the feasibility study to generate appropriate and relevant information may result in project managers making costly decisions that may impair the original intention or purpose of a project. This paper thus examines the importance of a feasibility study in project management.

Definition of Key Terms

Feasibility study: In the context of project management a feasibility study is a study that is done to determine options and whether the preferred or optimum option for a particular project is can achieve the desired objectives and sustainable given the likely resources available^[1]. Feasibility study can also be defined as an analysis of the viability of an idea. The feasibility study focuses on helping answer the essential question of “should we proceed with the proposed project idea^[2] ?

Project: A project is any planned, temporary endeavor undertaken to create a unique product, service or other complete and definite outcome (deliverable) within a limited resource time scale and budget and normally requires mobilization of resources from different disciplines^[3].

Project Management: Project management is the planning, organizing, directing and controlling of resources for a relatively short-term objective that has been established to complete specific goals and objectives^[4]. Project management therefore can be described as the means, techniques and concepts used to run a project and achieve its objectives.

Types of feasibility studies

The importance of feasibility study in project management can only be understood within the context of the types of feasibility studies and their main focus. There are four types of feasibility studies. These four types are the technical, economic, schedule and operational feasibility^[5]. Technical feasibility places particular focus on the availability of technology that is needed to achieve the objectives of the project^[6]. The key considerations of technical feasibility are whether the technology is obtained locally, the costs of the technology if it is to be imported and how relevant is it to the achievement of project objectives. In a broad sense technical feasibility seeks to determine the availability, costs and technological risks associated with technology that is needed to achieve project objectives. For example technologically intense projects such as mining require a detailed technical feasibility study that will determine technological availability, costs and associated risks particularly to the environment.

Economic feasibility studies focus on the costs associated with a project and how they can be kept at a minimum level^[7]. The major factor under an economic feasibility study is whether the project is possible given the resource constraints. Economic feasibility seeks to determine the monetary benefits that accrue from a given project as well as the financial costs associated with a project. Usually a project alternative that yields more benefits than costs is adopted and implemented^[8]. For instance in a dam construction project, if an alternative promises to give more benefits in terms of the number of irrigation schemes that will benefit the local people, returns from possible tourism ventures and envisaged drinking water security there is a high possibility that it will be adopted. However, in developing countries such as Zimbabwe projects are selected not on the basis of the results of an economic feasibility study but on the basis of political mileage that they will yield to the governing elites^[9].

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^[1] US. Army Corps of Engineering, 2003:4.

^[2] Micon International Limited, 2009:1

^[3] Kerzner, H, 2011:14

^[4] Kerzner, H, 2011:15

^[5] Harrington, R, 2011:2

^[6] Ibid, p4

^[7] Wysocki, R.K and McGary, R, 2008:5

^[8] Carley, M, 1987:10

^[9] Ibid, p22.