Before we can discuss the concept of a “Project Feasibility Study”, we need to first understand what a feasibility report is. The feasibility study, also known as viability analysis or feasibility study, is also known by the term project feasibility. This technique is used to determine if a business problem or improvement opportunity is feasible. This is an important step in the Six Sigma approach to problem solving. Online Six Sigma training explains how the project feasibility study fits in the “Define” phase of the Six Sigma DMAIC process.
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This feasibility study is used to make the decision about whether or not to proceed with the project. This study is designed to verify that a project can be implemented legally, technically, economically, and operationally. This study will tell us if a project is worthwhile. A feasibility study is the most important part of a project. It evaluates the project’s potential for success. If the feasibility study contains errors, there is a good chance that your project will be abandoned. This is how feasibility studies are so important.
There are two criteria to evaluate a feasibility study for a project.
According to Lean Six Sigma, there are two main criteria that can be used to determine feasibility of a project feasibility study. The first is the cost of the project and the second is the value that will be delivered. A well-designed, well-planned study should provide:
An overview of the business problem or improvement opportunity.
Description of the product/service
Statements of accounting, details of operations, and management
Marketing research and policies
Financial data, legal requirements, and tax obligations
The key reasons to conduct a feasibility study for a project
A feasibility study is necessary for the following reasons:
Not all projects are possible
Not all projects should be undertaken. This will make it difficult to use otherwise valuable resources for a project that is not of value.
Every project is not an efficient use of resources.
Definition of a business opportunity or problem to be studied
Analyse of AS-IS operations
A customer definition; could be your internal or external customer
A mutually agreed upon course of action
Five Benefits of a Project Feasibility Study
Let’s quickly take a look at 5 benefits of conducting project feasibility studies. A project feasibility study is always a benefit. It provides all stakeholders with a clear picture about the business problem or improvement opportunity.
1. Give reasons why you are able to undertake the project.
It allows the project team to identify valid reasons for undertaking the project. Remember that not all reasons are valid. It is equally important for the project team to be able measure the validity of the reason using data, facts, figures, and so forth. The project feasibility study allows the project team to quantify the validity of the reasons for doing the project. These are not the places where our gut feelings have any value.
2. Before the project kicks-off, make key decisions
It assists the project team in making critical decisions before the project kicks off. It can help you decide whether the project is feasible, if it is financially and operationally viable, etc.
3. Prioritize business problems and identify improvement opportunities
Project feasibility studies help project teams prioritize business problems or potential improvement opportunities. Prioritization is done in a quantitative manner.
4. Reduce the scope of your project
The feasibility study helps to narrow down the scope of the business problem being considered. The business problem may be complex or vast. These types of problems are called “business problems”.