The dictionary meaning of feasibility is the likelihood of something happening and in the case of finance feasibility study refers to that assessment by which company ensures that whether or not it is possible and advantageous to start a company or a project or not. Given below are the main features of feasibility study –
Features of Feasibility Study
- The first and foremost feature of the feasibility study is that it should be comprehensive and covers all aspects in order to be successful because if the feasibility study is incomplete than company’s decisions on the basis of that feasibility study will be a failure. So for example, if the company has done market feasibility, technical feasibility but inappropriate financial feasibility than the whole exercise of the feasibility study will be futile.
- A feasibility study is a starting point before an owner makes a business plan and then subsequently decides to start a business. Hence in a way feasibility study is similar to the foundation of a building as building depends on the stronger foundation in the same way a success of the business depends on the good feasibility study.
- Another feature of the feasibility study is that it should be specific rather than general, so, for example, a construction coming doing construction project requires feasibility study of the project site and related factors and not feasibility study of the economy of the world or of the country.
- A feasibility study should look at both pros and cons of starting a new company or project and it should not be biased because then it will lead to errors. So for example if the mobile manufacturer owner wants to launch expensive mobile but on doing feasibility study the company finds out that there is no market for expensive mobiles than company should not go ahead with the plan even if hurts the ego of the top management as feasibility study has found more cons than pros and therefore it is not advisable to launch the expensive mobile.
- Another characteristic of the feasibility study is that it can be used for not only accepting or starting a project but also for rejecting many projects and hence sometimes companies undertake it in order to save unnecessary expenses arising out for selection of wrong projects.
As one can see from the above that feasibility study has many important characteristics and that is the reason why companies should do feasibility study properly if it wants to achieve success for the project or the company.