[rank_math_breadcrumb]

FEASIBILITY STUDIES

Category: Other Services
Written by Rivary Finan Hernawan on 22/06/2022
The author’s views are entirely their own and may not always reflect the views of Putranto Alliance.

Feasibility Study (FS) is an analytical technique used to assess the quality of a project’s factors. In the world of project management, this is a very important measuring tool. Each team require this study to assess the feasibility of the project. In addition, it also values human resources and logistics requirements. Furthermore, it can also analyze the company’s or organizer’s achievable return on investment by the company or the organizers.

With this service, we can help you to conduct market research to collect enhanced data as a basis for our projections. We will discuss with experienced predecessors in the industry, analyze and ask questions to ensure the validity of our data.

What is Feasibility Study?

One of the definitions in the Ministerial Regulation (“Permen”) of Bappenas Number 1 of 2009 concerning Procedures for Planning, Submission, and Assessment of Activities Financed with Domestic Loans states that Feasibility Study is the result of research made by experts from the Ministry/Institution/Regional Government/BUMN. Furthermore, the relevant State Ministry/Institution/Regional Government/BUMN contracts the study as a basis for decision making in doing the project. It also provides a thorough illustration of whether an activity is appropriate or not based on aspects deemed necessary.

Companies usually do a feasibility study early in the project stage and it is one part of the main design stage during the planning period. On the other hand, large companies perform Feasibility Study to objectively reveal the strengths and weaknesses of the proposed project. The results of the analysis can help project managers to identify and assess the opportunities and threats that could exist in the environment, the resources needed, and the prospects for success. Therefore, the main factors in the analysis process include Economic, Technical, Legal, and Operational.

Why Do You Need Feasibility Study?

Businesses conduct Feasibility Study because they need to know who will buy their goods. After all, new product failure rates usually range from 70% to 80%. Therefore, corporations conduct a new product feasibility study to demonstrate demand for the new product and to make data-driven suggestions for the following steps in the market entry process. Companies frequently set aside funds in their budgets for new product development research to ensure that they will obtain the best potential return on their investment.

An in-depth business feasibility study can even help you carry out critical elements of a business because this study provides an overview of the business situation that a company will face later. Well-known companies usually use feasibility studies to evaluate and test the weaknesses and strengths of a project plan in actuality.

Companies build projects differently, as they depend on the scale, sector, and other factors. However, a feasibility study commonly achieves similar outputs

Feedback of the new projects;
Robustness check of the project’s data;
Market survey and research;
Structured business plan summary; and
Projected income statement.

The Importance of Feasibility Studies

Feasibility Study is important for companies. It helps them to thoroughly understand all aspects of a project, concept, or plan.

In project management, businesses’ desire to get the project right before investing resources in the form of time and money determines the value of a feasibility study. A feasibility study uncovers new ideas that alter the project’s plan and scope completely. This method allows clients to plan ahead of time rather than jumping in and afterward regretting a project that doesn’t work. A feasibility study is beneficial since it provides consumers with a clear picture of the project they have chosen.

The following are some of the most important advantages of doing a feasibility report in project management:

Opening new possibilities for the project’s design;
Providing useful feedback on present and future decisions;
Increasing the project’s success rate;
Summary of the project’s worth to the decision-makers;
Determining the project's financial viability; and
Recognizing how the market introduces items and service.

Types of Feasibility Studies

Technical Study

The first type of feasibility study is technical study. It helps the company to determine whether its technical resources are up to capacity and whether the technical team can turn ideas into good working systems. This technical feasibility test also involves evaluating the hardware, software, and other technical requirements proposed during the planning stage.
Economic Study

conomic feasibility study usually involves researching the costs and benefits of the project to help the organization determine the viability of the project before they allocate the financial resources. It also serves as an independent project appraisal technique and can increase project credibility. The results of the analysis will help decision-makers to determine the positive economic benefits for the organization acquired after the project is over.
Legal Study

The next type of feasibility study that companies can perform is legal feasibility. Companies use this type of analysis to investigate whether any aspect of the project conflicts with legal requirements (such as zoning laws and data protection laws). Let's say a company wants to build a new office building in a certain location. This feasibility study can reveal whether the location the company chooses is suitable or not for their type of business.

Operational Study

The last type of feasibility study often used in large projects is operational feasibility. This assessment technique involves a study to analyze and determine whether the implementation of the project can fulfill the needs of the organization. This operational feasibility study can also check whether the project plan meets the identifiable requirements in the business development analysis phase.

Aspects of Feasibility Study

There are several researchable basic aspects when conducting a business feasibility study. Such asopects include management, financial, legal, economic and cultural, market and marketing, as well as technical and operating aspects. The detailed explanation is as follows:

Management Aspect

This aspect is a very important aspect to study because it relates to business and its operations. The scope of this aspect is the widest of other aspects, connected to finance and company resources.
Financial Aspect

Capital is one of the keys to starting a business or venture. If you want to do business planning, you must carry out the capital planning process from the start. The estimated value of the project (business or business), projected cash flow and profitability, other business investments by investors, and the financial viability of the project are some of the aspects you need to take into account at the least.
Legal Aspect

Business legality in the eyes of the law is one of the factors that is analyzed in a business feasibility study. The aim is to examine the level of accuracy, correctness, authenticity, and perfection of the business document. The scope of legality can be in the form of a location permit, Taxpayer Identification Number (NPWP), Company Registration Certificate, Trading Business License (SIUP), company establishment deed from a notary, Business Place Permit, and Partner Certificate from the local government.

Economic and Cultural Aspects

Market and Marketing Aspect

Technical and Operational Aspect

The possibility to see the broad scope of a project makes Feasibility Study important for business owners. This study can act as a pointer for companies if the business they run is still competitive in the market or not.

When Do You Need Feasibility Study?

A Feasibility Study is needed when a company wants to initiate a project and needs insights into the project’s prospects (especially if the project is new). The optimal time for the company to conduct a feasibility study is in the early stages of the project, especially during the planning design stage. This way, a company can have a good grasp of the project before committing any resources to them.

A Feasibility study is generally conducted at the beginning of the project initiation. The main purpose of a business feasibility study is to assess the business project opportunities, and whether the project is worth continuing or not. If the project is indeed worth continuing, then business can plan the steps needed to avoid the risk of loss in advance.

How We Can Help

To summarize, Feasibility Study is about finding and explaining the importance of the project and finding out its usefulness for those who want to realize the idea of a project and its expected output. The report is handed over to the project owner to study it further and get acquainted with all its aspects.

Hiring a third-party market research agency for Feasibility Study has several advantages. One of them is an opportunity to view the project from the outer perspective. This lowers bias when designing the study, interpreting the findings, and making suggestions for the project. As such, it is highly recommended to hire a third-party market research firm to conduct a feasibility study of new projects.

With our expertise, we will guide you in conducting a feasibility study for your projects. We will help you examine every possible improvement and brainstorm solutions if you have problems in the planning of your projects. Feel free to contact us if you require.

References

Pentingnya Melakukan Studi Kelayakan Bisnis – Masoem University ❯

What is The Importance of a Feasibility Study in Project Management – University of Colorado ❯

Feasibility Study Atau Prafeasibility Study Bukan Business Case – KPBU Kemenkeu ❯

Studi Kelayakan Bisnis, Pelajari Pengertian, Tujuan, dan Tahapannya – KEMENKOPUKM ❯

FAQs

What is the difference between Feasibility Study and concept planning?

Concept Planning generates the project’s concept, while Feasibility Study assesses the concept’s viability. To ensure impartial judgment and transparent processes, independent parties usually carry out the two processes out separately.

What are some of the best practices in conducting a feasibility study?

While it is usually varies depending on the project’s aims and demands, a feasibility study usually follows these practices:

Preliminary analysis, which includes gathering feedback from relevant stakeholders on the new projects;
Data verification, to ensure that the project is reliable.
Market study or market research, to determine the market demand and opportunity for developing the project or business.
Analysis of the project’s labor requirement.
Projection of the project’s profit.
Identification of potential hurdles and vulnerabilities, as well as how to address them.
Making a preliminary “do” or “don’t” decision regarding the strategy.

What are the points that are usually highlighted in the feasibility study report?

Some of the components that are often found in a feasibility study report are, but are not limited to:

Summary of the report (Containing a short narrative that describes the project, product, service, plan, or business in detail);
Technical considerations (Containing the technological requirements and constraints of the projects);
Currently existing markets (Listing the product and services that are already present in local and global markets);
Detail of the project’s marketing approach;
Staffing requirements (Can be done with an organizational chart);
Timeline and schedule;
Funding of the project; and
Conclusions and suggestions.

Thank you for sharing

« back to Other Services Hub