What Are the 7 Key Steps to Conducting a Feasibility Study?

A comprehensive feasibility study is a critical project viability assessment that determines whether a proposed initiative is technically, financially, and operationally sound before significant resources are committed. Based on our assessment experience, following a structured seven-step process significantly increases the accuracy of your go/no-go decision, helping organizations avoid costly project failures and allocate resources more effectively.

What is the First Step in a Feasibility Study?

The process begins with a preliminary analysis, which is a high-level review to define the study's scope and justify the investment in a full-scale assessment. This initial phase involves identifying key stakeholders, defining project goals, understanding potential risks, and reviewing any previous related studies. The primary objective is to determine if there are any obvious roadblocks that would make a more detailed study unnecessary, thereby saving time and resources early on.

How Do You Estimate Project Financials and Conduct Market Research?

Once the preliminary analysis gives a green light, the next critical phases involve detailed financial and market evaluation. Creating a projected income statement helps estimate the required investment, operational costs, and potential revenue. This should account for all funding sources and fixed and variable costs.

Concurrently, market research provides essential data on the competitive landscape, target customer demographics, and overall market value. Methods like surveys, focus groups, and analysis of market trends are used to forecast potential market share and demand, ensuring the project is economically viable.

What is Involved in Planning Operations and Reviewing the Data?

After establishing the financial and market groundwork, the focus shifts to operational and technical logistics. This step involves creating an organization and operations plan that examines:

• Technical Feasibility: Does the organization possess the necessary technology and expertise?
• Operational Feasibility: How well does the project align with current business goals and resources? Based on this plan, a detailed balance of expected revenue and expenses is calculated, accounting for assets, liabilities, and potential financial risks.

A thorough review of all collected data is then conducted to check for accuracy and reliability. This often involves a second-tier review by other executives to identify any loopholes or require alternative approaches before the final decision is made.

How Do You Make the Final Go/No-Go Decision?

The final step is the decision point. With all the analyzed data—encompassing economic, technical, legal, operational, and scheduling feasibility—stakeholders can make an informed choice. This decision considers both short-term implementation hurdles and long-term strategic alignment, ensuring the project has the highest chance of success before moving forward.

To maximize the effectiveness of your next feasibility study, remember to:

• Always start with a preliminary analysis to avoid wasted effort on non-viable projects.
• Integrate market research directly with financial forecasting for a more accurate picture of potential ROI.
• Conduct a multi-faceted review of the entire study to ensure data integrity and uncover hidden risks.