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A feasibility study estimates the viability of planned projects based on the existing risks.
Construction of a feasibility study
In the framework of a viability-check, it is examined whether a project or a business is implementable, and most importantly whether it is economically viable. Can a financial safety net be established? Is enough own capital available? How far will cost-risks negatively affect the project in the future? Further key questions which are examined in the feasibility study include:
- Could legal circumstances cause problems?
- Is the available time frame sufficient for the implementation of the project?
- Can personnel, machines, materials and resources be provided in time?
- With technical projects: is the plan technically possible?
- Is the project workable in terms of organization?
Often, a feasibility study will be implemented for many projects. The project that looks to be most promising will then be chosen. A risk analysis will also often be carried out at the same time as the feasibility study.
In a feasibility study, the different possible projects or solutions are analyzed and valued based on their implementability. For each project, both chances of success as well as risks are investigated. On this basis, a recommendation can be given for each project. If it becomes clear that a project is feasible, the company can begin with the detailed planning. If a project is valued as not feasible, it either has to be omitted or thoroughly edited after the Feasibility Study.
A feasibility study will be implemented in order to find the project that creates the optimal solution for the company. At the same time, possible risks should be discovered so that these can be dealt with timely. Moreover, a feasibility study prevents any unprofitable investments.
Advantages and Disadvantages
A Feasibility Study has many advantages:
- Structured approaches to new projects
- Finding alternative solutions
- Reduction in the number of possible projects
- Identification of reasons which speak against a project.
- Development of the basics for the later implementation of the project.
- Basis for the decision of possible investors for an investment in the project
Often, at the time of completion of a feasibility study, objections such as lack of time, high costs or previous analysis will be introduced into the study. A Feasibility Study should, however, be concentrated on the current project. Outdated analysis may no longer be reliable.
Significance for Online Marketing
Feasibility Studies will also be used in online marketing to find out which projects should be implemented. For example, if a company is considering the use of more, more expensive URLs, they can carry out a feasibility study to analyze the potential value of the URLs, and how they can monetarize this. Pre-investment studies also play an important role in e-commerce. For example, when a company wants to make changes to an online shop, impacts for the user and thus usability have to be considered.