Why is it important to do a feasibility test for your project management? First, a feasibility study or feasibility analysis is the basis of your project plan. A feasibility test determines the validity and credibility of your project.
What does the feasibility study mean?
an assessment or evaluation of the practicality of a proposed project, plan or method is called it’s feasibility test. For this we need to analyse technical, financial, legal, operational and time feasibility factors. “Feasibility” term itself defines the meaning (Feasibility – is it feasible?). While doing a feasibility test one may ask “do you have or can you create the technology to do what you propose?” Or “Do you have the right people, tools and resources?” Or “will the project bring you the expected return on investment?” Use jobs to be done to serve the needs of our product’s customers.
What is the right time to do a feasibility test?
This should be done at this stage of the project management life cycle after the business case is closed. Remember to view products through the lens of jobs to be done to broaden your knowledge.
So, that the “what” and the “when” can be answered. But at this stage “why” remains unanswered. So why is a feasibility study needed? Well, it determines the factors that affect the feasibility of the project, which makes it quite important.
When researching feasibility, project management software can help you keep track of all this information. ProjectManager does more than simply collect items like most task lists. Assign a team member to get the analytics information you need. See their progress in real-time. They can attach supporting documents. If you need a question answered, tag a team member and they’ll be notified via email and in-app notifications. Jobs to be done can help to serve our needs in an easy manner. You can improve the feasibility analysis process with ProjectManager. Try it today for free.
What is included in a feasibility test?
- Executive summary
- Marketing strategy
- Description of product/service
- Technology considerations
- Product/service marketplace
- Financial projections
- Findings and recommendations
What are the types of feasibility tests?
- Technical feasibility:
a technical feasibility test determines whether your organization has the technical resources to complete your project or not. What is the expertise of your organization to meet your project? How can you arrange & manage the available resources to make your project successful?
- Economic feasibility:
You must evaluate the financial factors of your project to determine its financial viability. Cost-benefit analysis can be done to compare organisation’s financing costs with the expected returns.
- Legal feasibility test:
A legal feasibility test is also very important for every organisation to work on a project. Your project must meet the requirements established by law. It contains the laws and regulations that apply to all activities and operations within your project.
- Operational feasibility test:
The operational feasibility test refers to how well your project aligns with your organization’s capacity planning, resources, strategic goals, and business objectives. It basically observes how your organization functions to complete a project.
- Time feasibility test:
Time feasibility test estimates the time needed to complete the project and set deadlines. Then consider how your project schedule fits into your current activities, such as demand planning, production planning, and more.
How to do a feasibility test?
Start by describing your project plan. You should focus on unmet needs, markets where demand is greater than supply, and whether the product or service has a clear advantage. After that you need to determine if the feasibility factors are too high (i.e. too expensive, can’t market effectively, etc.).
Prepare a projected income statement
This step requires working backward. Start with what you estimate the project’s revenue will be and then what project funding is needed to reach that goal. This is the basis of the income statement. At this point, you must consider, among other things, what services are needed and how much they cost, possible changes in income, such as benefits, etc.
Do market research
This step is key to the success of your feasibility test, so make your market analysis as in-depth as possible. It’s so important that if your organization doesn’t have the resources to do it right, it’s cost-effective to hire an outside company to do it.
Market research gives you the clearest picture of the revenue and ROI you can realistically expect from a project. Some things to consider are geographic impact on the market, demographics, competitor analysis, your market value and market share, and whether the market is open to expansion (i.e. response to your offer). You can use the jobs to be done method for this.
Set up the organisation or do planning for operation
Once the foundation of the previous stages has been laid, it is time to establish the organization and operation of the proposed project according to its technical, operational, financial and legal feasibility factors. This is not a superficial or exhaustive endeavour. It should be comprehensive, encompassing startup costs, fixed investments, and operating expenses.
These costs include things like equipment, sales methods, real estate, employees, availability of supplies, overheads, etc. Don’t forget to widen your knowledge with jobs to be done.
Prepare balance sheet
This includes the valuation of assets and liabilities, which should be as accurate as possible. You can do this by creating a list that includes products, sources, costs and available funds. Liabilities considered are, for example, lease or purchase of land, buildings and equipment, financing of assets and claims against buyers.
Analyse all the data
All of these steps are important, but review and analysis are especially important to ensure that everything is as it should be and nothing needs to be changed or adjusted. So take a moment and look at your latest work.
Recheck your previous steps, such as your income statement, and compare them with your expenses and liabilities. Is it still realistic? Now is also the time to think about risks, analyze and mitigate them, and make contingency plans. You can manage your data and work through the Jobs to be done method.
How to assess the feasibility test?
The following questions are evaluated to assess the feasibility test :
Is it Real?
Is there a market for the product? Is there a real need in the market? Which markets can benefit from such a product? Will customers buy it? What is the chance? Can the product really be produced? What techniques are needed? Do we have these technical capabilities in-house, or do we have opportunities to license or source what we need?
Can you Win?
You have to Analyze your competitive environment. Is the product offered competitive? What are the product’s competitive advantages? Do we compete on price, performance, innovative features, service, reliability or time to market? Is this competitive base sustainable? What competitive response do we expect? Is the basis of competition compatible with our overall strategy?
Is it worthy?
Do you have realistic estimates of sales and income? Is the cost of the product reasonable? Can you afford the development cost? Will the product be profitable for you and will that profitability meet your expectations? Is the return sufficient for the investment? Can you bear the risks? Is this product compatible with our corporate strategy? These profitability questions are usually answered with a formal business case that shows projected profits over the life of the product or expresses this information as a return on investment (ROI) or other similar financial metric.
In the feasibility phase of product development, the company must gather information and conduct analyses to assess the feasibility of a new product or to develop a business. The fact that product development investment and design change costs increase rapidly after the feasibility phase highlights the importance of doing homework well during the feasibility phase. Jobs to be done is a great way to create a balance while working.