Feasibility Studies

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Feasibility studies definition – what is a feasibility study?

Feasibility studies are the assessment of the practical feasibility of a proposed plan, project or investment. All relevant factors will be systematical will be evaluated in such a study, and the most likely outcomes will be stated. And if potential problems emerge – stand-alone or in relation to the other factors – these problems should be further identified and studied, and solutions should be presented.

A feasibility study aims to arrive at an objective and rational assessment and mapping of
the scope of the plan (clarify and understand) -the opportunities and threats,
the resources required,
the possibilities and impossibilities of a company (regarding the realization of the plan),
the risks,
the resources required,
any optional alternatives for unforeseen circumstances,
and the prospects for success.

Ultimately, a feasibility study can be traced back to the structured recording of costs and revenues and mitigating risks. In the regulations, feasibility studies and analyzes are presented in a report, focused on the reader and intended intention, and must be suitable, credible and supportive for any decision-making.

The working method and reporting (structure/content) of a feasibility study are highly dependent on the nature of the plan concerned and the intended business development. However, a report will usually consist of the following components;
Table of contents
Executive summary
Description of plan and starting points
Preliminary analysis
Market
Marketing instruments
Technical and production considerations
Legal affairs
Organizational structure
Staffing
Financial resources
Environment & stakeholders
Observations & recommendations
Conclusions
Programme of demands
Schedule and milestones
Financial projections (budget estimate)
Appendix and reference pages


Types of feasibility studies – applications

Feasibility studies are conducted for all possible investments (capital expenditures (CapEx), new business ventures, and new projects to be undertaken, for both commercial or governmental initiatives, such for example;
Plan to obtain, expanding and/or upgrading assets such as machines and installations, plants, buildings, technology and intellectual property (patents, trademarks)
Acquisitions, buy a company or business venture
New market-entry, market expansion (target new markets)
Innovations, R&D
Product development, adjustments
Expansion (or limitation) of the product range
Real estate and infrastructure developments
Special requests for assignments/contracts (bids, RFQ)
(Re)-branding
Business partners collaboration


The difference and similarities between a business case and feasibility study

This is understandably a question asked repeatedly. Both a feasibility study and a business case consider the value, feasibility, and options for a new commercial initiatives; the focus of each document is different.

The feasibility study focuses on assessing the technical and economic feasibility of a new initiative by identifying what criteria must be met to achieve the desired result and justifying whether and how the organization meets these criteria given its current vision, skills, and abilities can meet resources. Feasibility studies generally assume that resources are available to carry out the initiative.

The focus of a business case is on justifying the approval to proceed and the allocation of resources to implement the proposed new initiative. Business cases generally assume that the initiative is feasible and aim to prepare a funding application based on the results of the previous feasibility study.

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