Feasibility Analysis

Purpose

The feasibility analysis is designed to determine whether or not, given the project environment, a project will be successful (in virtually any interpretation of that word). A feasibility analysis may be conducted for a project with an emphasis on financial viability, environmental integrity, cultural acceptability, or political practicability. It is a determination as to the likelihood of success and a description of how that determination was achieved.

Application

Feasibility analyses are used to present an approach or a series of alternatives and to offer decision-making guidance based on the climate in which the project will evolve. They often defend a single or primary approach, incorporating extensive forecasts on the project’s development, as well as its evolution after implementation. Because a feasibility analysis may focus on one or many aspects of a project, it may be a very short (one- to two-page) or long (multivolume) document. In any case, it generally begins with an executive summary and a description of the project outputs in their as-built condition.

Content

The sources for content in a feasibility analysis come through extensive research, discussion, and assessment and may incorporate the use of advanced computer modeling to determine the long-term impact of a project on the environment around it. Other feasibility analyses may be rooted only in anecdotal evidence as provided by those who have worked on similar efforts or those who will ultimately be affected by the project’s outcome.

1.0 Executive Summary/Project Goal Overview or description of the impact of the project on its environment and the potential for success (or failure) based on the analysis. This may also include brief mention of the alternatives considered and their relative viability.

2.0 Project Description

2.1 Anticipated As-Built Condition This section is a description of the project as envisioned, including magnitude, location, community impact, and market change.

2.2 Anticipated Outputs In this section, both intended and consequential outputs of the project should be incorporated, without comment as to their relative benefit or detriment to the world around them.

3.0 Project Environment

3.1 Financial This section describes the financial climate in which the project will be developed and in which it will be implemented. This may include assessments of the relative magnitude of the project within the overall organizational budget and the potential drain on available resources.

3.2 Physical Environment A feasibility analysis should include a description of the environment surrounding the project, including the physical locations for development and implementation.

3.3 Societal/Cultural Environment Descriptions of the culture and society in and around the project community are another aspect to a feasibility analysis. This may include an emphasis on those social and cultural issues that will be directly affected by project development and implementation.

4.0 Similar Efforts

4.1 Scenarios The section provides an outline of similar efforts and a synopsis of their effects on the finances and physical and social environments of their project organizations and communities.

4.2 Similarities and Implications Determination of the degree of similarity between the scenarios outlined in Section 4.1 and the project(s) under scrutiny in the feasibility analysis is discussed in this section. All significant discrepancies among examples should
be noted.

5.0 Sensitivity Analyses

5.1 Financial A “what-if” analysis of finances to determine if the project is deemed viable is an important aspect of a feasibility analysis. An assessment of other organizational areas affected is included. This analysis may also examine the potential range of financial possibilities if the project fares extremely well or poorly.

5.2 Physical Environment This section involves a “what-if” analysis of the physical environment if the project is deemed viable. It includes an assessment of physical effects to the organization and the areas around the project. This analysis may also examine the potential range of physical manifestations if the project fares extremely well or poorly.

5.3 Social/Cultural Environment The section is a “what-if” analysis of the social and cultural environment if the project is deemed viable. It includes an assessment of the effects to local, regional, national, and international societies. This analysis may also address the potential range of social and cultural implications if the project fares extremely well or poorly.

6.0 Marketing/Public Relations

6.1 Market Analysis The market analysis includes an assessment of the potential market for the project or its outputs, including (but not limited to) the financial buying power of the market, interest in or demand for the project, and the life span of the market’s potential members.

6.2 Forecasts Predictions regarding sales, returns, and buying trends related to the project and its outputs are included in the forecasting section. Ideally, the forecast includes the timing of the market entry and the relative impact of early or late entry into the marketplace.

6.3 Competitive Environment The competitive environment section contains information on other organizations capable of conducting the project and/or producing its deliverables (or their equivalent). This may also incorporate some assessment of how potentially fickle the market may be about the project or its deliverables.

6.4 Risk Major risks should be considered in any feasibility analysis. They include those that could radically alter any or all of the assumptions on which the feasibility assessment is based and the potential market impact if those risks come to pass.

7.0 Conclusions and Recommendations

Based on the information from the analysis, this section discusses the conclusions that can be drawn regarding the viability (or nonviability) of the project, given the environment in which it will be developed and implemented. This normally includes a go/no-go decision and the implications of both of those decisions.

Approaches

Some feasibility analyses will include extensive discussions on the project plan for how and when the project will evolve and the expectations during development. Some will go into extensive detail about the side effects of the project both during development and implementation. Because feasibility analyses are developed for everything from new business methodologies to power plant installations, the range of possibilities in terms of what they may include is virtually endless. The key to determining if information is appropriate in a feasibility analysis is to assess whether or not the information provided helps to generate a more accurate understanding of whether or not the project will succeed in implementation, regardless of the metric for success.

Considerations

Because projects are undertaken with sponsors and supporters, the feasibility analysis will promote a particular point of view or perspective in making the go/no-go decision. It is to the author’s advantage to minimize the politicization of the feasibility analysis, because any skewing of the data may be seen as rendering the rest of the document and its findings moot.