What is Feasibility Study
Feasibility study is done to know whether any specific activity or project idea should be further developed or not. When a project is taken up for development, the project assessing body faces three situations:-
If the project seems to be feasible, pre-investment studies and design development are undertaken. If project does not seem to be feasible, project idea is abandoned. If the data is not sufficient to arrive at decision regarding feasibility of project, the investment decision is postponed till the additional required information is collected.
A company might perform a feasibility study to evaluate a proposed change in location, the acquisition of another company, a purchase of major equipment or a new computer system, the introduction of a new product or service, or the hiring of additional employees.
The feasibility analysis relating to the project is carried out in three stages-pre-feasibility study, feasibility study and project report. The identified project is analyzed from viability point of view and various aspects of the project like technical, financial, marketing etc. are looked into. The report of analysis is presented in a systematic manner along with supporting data.
1.Pre-feasibility study:-it is preliminary assessment of project idea. It helps project assessing bodies to decide about the viability of the project by looking into the information supplied in the study. A project should be analysed from all angles. Any opinion about feasibility of project should be supported by the reports of market surveys, laboratory tests etc. it is on the basis of pre-feasibility study that an investment decision can be taken. 2.Feasibility study:-in feasibility study, the project is analysed from six aspects-economic, managerial, technical, commercial, financial and organizational. All these aspects are not equally important and their relative importance varies considerably according to the nature of project involved. But one thing is sure and that is-the feasibility study must cover all the aspects of an investment project even alternate solution. If supporting data or studies point towards non-viable project, then adjustments should be done in production programmes, inputs or technology to make the project viable one. However if project is viable, then it must be justified and staed well in the study.
Project report:-the feasibility report provides information that is required for project appraisal. It enables the concerned authorities to take objective decision on project and enables financing agencies to purposefully evaluate the project before extending financial assistance.