Various aspects involved in Project Feasibility Studies
Before the commencement of any project, it is a good idea to carry out a feasibility study to assess its viability and how profit worthy it would be. What a feasibility study does is analyze the potential of a project that is still on the drawing board to determine its advantages and disadvantages in order to get an idea as to whether you should go ahead with it or not. Such a study would involve quite a bit of research and surveys carried out on the market which will go a long way in helping to get the correct perspective of the planned project.
Benefits of a feasibility study
- Feasibility will help you to identify your potential market and its necessity at the time you’re hoping to enter it.
- You will be able to identify your target customers and what they expect the new project to bring them.
- A well carried out study together with a business plan will help an entrepreneur no end in obtaining financial support from banks and other lending organizations because potential investors require some sort of proof that the money they invest will be put to good use and will also bring then profits eventually.
- A feasibility study will portray a businessman as a professional who has the skills and know how to start a successful venture.
- It will help you to understand your strengths and weaknesses enabling you to draw up your project plan accordingly so that very few mistakes are made.
Assessing the Impact of the Project
The feasibility study of a large product will also help determine the necessity to change or upgrade the current organizational structure in keeping with the project requirements. All aspects of the project will have to be taken into consideration such as the impact the new project will have on the community, the environment, the organization and last but not least on the employees. A new project should be of benefit to the employees working in it and not be a risk factor for their terms of employment.
How will it affect the community and environment?
For instances, an assessment will have to be made how the proposed project will affect the life of the community, will it be of benefit to them or create a negative impact? What about the environment; will there be an adverse effect on the environment due to various reasons such as having to cut down trees or block waterways. Will it cause the air or drinking water to be polluted or will it make life uncomfortable for the people living in the area?
The next step is to carry out a technology feasibility of the project and how capable the organization is to come up with the required technological resources to complete the project successfully. If such resources are not available at present, how feasible is it to buy the technology locally or from abroad in keeping with the budgetary allocations for new technology and relevant resources including the manpower to handle the latest technology.
Once the above factors have been taken into consideration you will have to draw up a financial viability chart to assess how much you are willing and able to invest in your project. Before that however, you will have to make rough estimate of the cost of the total project until its completion, the amount you hope to obtain from investors or lenders such as banks and financial institutions and other business partners etc. In the final analysis an assessment will have to be made of the financial benefits and returns you expect from your project and how long it will before you can hope to see the project paying for itself. In this analysis you will also have to outline how you expect to pay back your lenders while disbursing profits to those who have invested in the project.
Many projects fail because a proper evaluation is not done before the plan is drawn and the work begun. The time factor of a project is very important and any project feasibility should assess the time it will take for the project to complete leaving room for unexpected contingencies that can always make schedules go haywire. Deadlines are crucial to some projects and if not completed within the time period it could cost the project implementer much in the way of money and reputation. Therefore all these have to be assessed and put down on paper enabling a comprehensive project plan to be drawn based on the feasibility carried out regarding its viability.