What is a Feasibility Inspection?
A feasibility inspection, which may sometimes also be called a feasibility analysis or feasibility report, evaluates whether a project plan is viable or not. It strategically assesses the practicality and likelihood of success so that you can decide if you want to continue with the project or maybe change some variables. The findings of the inspection are recorded in a feasibility report.
A feasibility report records the findings of a feasibility inspection and answers the following two questions:
- Do we have the necessary tools and resources to get the project done?
- Will the return on investment be high enough to make the project worthwhile?
A feasibility inspection must be conducted after pitching a project but before actually starting any work. The inspection is essentially considered a part of the project planning process. Feasibility studies are often performed together with a project risk assessment or a Strengths and Weaknesses, Opportunities and Threats (SWOT) analysis.
A feasibility inspection is necessary for confirming market opportunities before you spend time, money, and effort on a project. It can also be used to choose between two business alternatives. This makes the feasibility report a useful decision-making tool as it provides you with relevant information such as the pros and cons of a proposed project.
A feasibility inspection might not be necessary if you have already determined that a project is viable or if you have done a similar project in the past. If your competitors are succeeding with a similar project, you might also want to skip the feasibility study. It will also not be necessary if the project is small and will have an insignificant long-term impact on your business.
In this article, you will learn more about:
1. The differences between a project report and a feasibility report
2. The four types of feasibility reports
3. The central elements of a feasibility inspection checklist
4. How a digital checklist can support you in conducting a feasibility study
What Is the Difference Between a Project Report and a Feasibility Study?
A project report records various aspects of a project for future reference and provides information about the scope, time, and budget of the project. It also includes the company background, project description, the process, marketing plan, operating costs, and capture structure. The feasibility report supports a detailed project report.
The Project Pitch vs. The Feasibility Report
A feasibility inspection, however, is different from a project pitch. In a pitch, you are evaluating whether a certain idea is good for your company or whether it is in line with your company’s overall strategic plan. The feasibility study is done when you have already decided that the project is a good idea in theory and fits with the company’s vision. The feasibility study is then a way to confirm that your team has access to the necessary tools and resources for the project.
The Project Charter vs. The Feasibility Report
A project charter is also not a feasibility study, since it is more informal. It is a document that you employ when pitching a project to stakeholders. It contains the project scope and objectives that the project sponsor or the executives in your company will review before approving the project for a feasibility inspection. A feasibility study must be done only after the approval of the project charter.
The Business Case vs. The Feasibility Report
A more formal version of the project charter, the business case, meanwhile, is made when pitching a bigger, more complex project with a significant impact on the organization. It is longer than the project charter and also includes information about the financial aspect of a project which concerns the senior stakeholders.
Once the stakeholders approve the business case, you can proceed to perform the feasibility study to make sure the project is doable. If the feasibility report shows that you don’t have the tools and resources for the project, you can request the executive stakeholders to provide them for you.
The Business Plan vs. The Feasibility Report
A feasibility inspection is also not a business plan. A business plan is a formal document that outlines your business goals. It is typically written when you are starting a business or your company is going through a significant change. It is a document that guides you in making business decisions such as formulating your short-term plans.
In implementing your business plan, you will need to invest in various projects. This is where you will need to conduct a feasibility inspection. This is to evaluate whether a certain project is practical and aligned with your business plan.
The Four Types of Feasibility Studies
A feasibility inspection has four key elements. They are also referred to as the different types of feasibility inspection. However, most feasibility studies include all of the following:
1. Technical feasibility
A technical feasibility study evaluates whether the planned project is technically possible and verifies that there will be no barriers to the performance of the project. This type of feasibility study determines if you have access to the equipment needed for the project and also assesses your team’s technical knowledge relevant to the project objectives. For example, if the objective of the project is to produce 100,000 products a month, but your team is only able to produce 50,000, the project is not technically feasible.
2. Financial feasibility
As the name suggests, financial feasibility evaluates the financial viability of the project. A cost-benefit analysis is performed during a financial feasibility inspection. This study also estimates the possible return on investment (ROI) and financial risks. The objective of a financial feasibility inspection is to find out the financial benefits the project will produce.
3. Market feasibility
How will the project’s output perform in the market? This is the question that the market feasibility study aims to answer. The study will involve a market competition breakdown, market analysis, and sales projections.
4. Operational feasibility
You need to determine whether or not your team has the capacity to complete the project. That is why you need an operational feasibility study. The study outlines the organizational structure, staffing requirements, and all legal requirements. The objective of this study will be to find out whether you have the skills and resources to complete the project.
The Central Elements Of a Feasibility Inspection Checklist
Most feasibility studies are structured similarly and serve as an assessment of the practicality of a proposed business idea. Creating a clear feasibility study helps project stakeholders during the decision-making process and should clearly outline the propositions.
A feasibility study generally contains the following elements:
- A preliminary analysis to determine whether you have enough time and resources for a project. If a preliminary analysis shows that you have access to resources and you can meet the deadline for the project, you can move on to a deeper feasibility study.
- A projected income statement that will clarify the expected cost of the project and the income your business will get from it.
- A market assessment to evaluate the demand for the end product in the market.
- A business plan that describes the product, the production schedule, startup costs, operational costs, organization chart, materials and equipment needed, location, labour costs, and other expenses such as taxes, insurance, and utilities.
- A balance sheet that shows the assets and liabilities on opening day or before the project generates an income.
- An executive summary, which is an overview of the feasibility inspection. Many stakeholders read only the executive summary of a feasibility inspection.
Successful and Efficient Feasibility Inspections With Digital Checklists
With Lumiform’s digital audit app you can easily perform a variety of inspections on the go from your smartphone or tablet – online or offline. Create checklists for your Feasibility Inspection Report to easily collect data and figure out if your project is ready to launch.
- Lumiform’s flexible form and checklist builder helps you convert any Feasibility Inspection into a digital format within minutes.
- Lumiform offers more than 10,000 ready-made templates to choose from, so that you can quickly and safely go digital with your inspections.
- With Lumiform’s intuitive and easy-to-use mobile app you and your team can easily perform feasibility inspections, assess whether a project is ready to launch and save time and money all in one.
- All feasibility report results are automatically summarised in a report and can be sent to responsible personnel on-the-fly – that way everyone stays on track.
- Comprehensive and automated analyses of your inspections help you uncover any troubles and errors fast and effectively so that you can be sure that your project is ready to go and thus allow you to concentrate on improving processes continuously.
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