Feasibility Analysis
Feasibility studies can help you determine the viability of a proposed project and identify potential
risks and opportunities. But what are the typical components of a feasibility study and why should
you hire an expert?
5 Key Components of a Feasibility Study
The five key components of a feasibility study include economic, marketing, technical, financial, and
management feasibility. Each type of study considers different aspects of the project, so it’s essential
to consider all five when deciding which route to take moving forward. With research and data-
driven insights, these studies provide decision-makers with valuable insight into their options for
success in any endeavor.
1. Economic Feasibility
Economic feasibility is a cost-benefit analysis that examines whether all the required inputs and
contracts are in place for the business to be operational, and whether the resulting benefits and
impacts are significant.
Factors to analyzes in Economic Feasibility:
• The minimum amount of inputs (labor, infrastructure, utilities, renewable resources,
feedstocks) to operate successfully.
• Contracts in place and contracts to be negotiated, including terms and renewals.
• Environmental risks.
• Cost of the project relative to the increase in revenues or benefits provided.
• The overall economic impact of the project, including new markets created and economic
development in the sector.
2. Market Feasibility
Market feasibility is an essential concept for any business or organization to consider. It focuses on
the current and future market potential of a project as well as the business’ target customers and
competition.
Factors to analyzes in Market Feasibility:
• Competition
• End user analysis, captive versus competitive
• Marketing plan
• By-product revenue streams
• Industry risk (scalability, supply chain issues, and more)
3. Technical Feasibility
Technical feasibility analyzes the reliability of the technology to be used and the analysis of the
delivery of goods or services, including transportation, business location, and the need for
technology, materials, and labor.
Factors to analyzes in Technical Feasibility:
• Assessments of commercial availability
• Product and process success record and duplication of results
• Experience of the service providers
• Roads, rail, airport infrastructure
• Water, electricity, and other utilities
• Use, age, and reliability of technology
• Construction risk
4. Financial Feasibility
Financial feasibility analysis identifies the elements needed to achieve a project’s financial
sustainability and meet all debt obligations through sufficient income, credit, and cashflow over the
long term.
Factors to analyzes in Financial Feasibility:
• Financial projections over 5-years
• Revenue & expenses assumptions
• Sensitivity analysis
• Accounting policies & cost accounting system
• Equity contribution and source of repayment
• Use of funds
• Availability of short-term credit
• Peer industry comparison
5. Management Feasibility
Management feasibility analysis examines the ownership, board, history, and qualifications of the
business or organization, as well as the skill or experience required to implement the project.
