Feasibility studies aim to objectively discover the strengths and weaknesses of an existing business or proposed venture. They also look at the opportunities and threats in the current industry and the resources required to carry out the process required. Objectivity is essential when conducting a feasibility study. The study judges a project’s potential for success and therefore it needs to be objective in order to hold credibility among potential investors and financial institutions.
The two criteria to judge feasibility are cost required and value to be obtained.¹ Therefore, a well-designed study should provide a historical background of the project, description of the venture, accounting statements, operations and management details, legal requirements, and tax obligations.¹
The acronym TELOS covers the five areas of feasibility: technical, economic, legal, operational, and scheduling. Technical feasibility is whether or not the company has the technical experience to handle the completion of the project. An evaluation of the hardware and software and how it meets the requirements of the venture is included.² Economic feasibility is used to determine the positive economic benefits that the venture will provide. This includes a list of all the benefits that would be provided and often includes a cost/benefit analysis.² Legal feasibility is whether the venture conflicts with legal requirements or obligations or if its legality could come into question.² Operational feasibility determines how well the venture solves the problems that were meant to be solved and also determines how well the new venture fits within the existing business environment.² Lastly, schedule feasibility estimates how long the venture will take to develop and if it can actually be completed within the projected timeframe.²
1. Young, G. I. M. (1970). Feasibility studies. Appraisal Journal, 38(3), 376 - 383.
2. Bentley, L. & Whitten, J. (2007). System Analysis & Design for the Global Enterprise. 7th ed. (p 417).