A project feasibility study examines a number of variables and can reveal that even though a project might be profitable or beneficial to your company, you don't have the resources to pull it off. A feasibility study might show that you should go forward with a project but at a specific time. Conducting a feasibility study helps you determine your likelihood of success and can indicate how and when to do a project.
Just because you can undertake and finish a project doesn't mean you should pursue it. A profitable project might drain your resources in other areas or limit your ability to pursue another project that would provide a larger return on your investment. Project feasibility studies show you the risk/reward benefit, opportunity costs, and overall return.
A project that is easy to do in the spring might cause significant stress on your company if you try to do it in the winter. This all depends on your labor, production capacity, supply chain, cash flow, and financing options. If a feasibility study doesn't take into account the time of the year the project will occur, re-evaluate the study to determine if its projected results will change depending on when you undertake the project.
You might need to hold off on undertaking a project until you have enough cash on hand to fund the effort. You might have good sales in January, but if you offer creditors 90-day terms, you won't be able to use the cash from those sales to start your project until April. Include cash flow considerations in any feasibility study to ensure you can adequately fund a project that, by all other indications, is a go.
A project that seems like a no-brainer might put too much stress on one or more areas of your company, causing more damage than good to your overall business. For example, launching a new product could prove profitable on paper but might need significant marketing planning and execution. If your marketing staff is already working at full capacity, you will need to divert their time from other profitable efforts or accept a less-than-optimal effort on your new launch. Making and selling a product and service can also stress your production, billing, sales, warehousing, and shipping functions.
A good feasibility study looks at the quality of your staff rather than just the quantity. For example, an Internet company's graphic artists might have plenty of time to help the business launch a print magazine, but these artists might not be trained to create a magazine grid, understand print typography or know how to create sections of a magazine such as departments, columns and feature walls. A salesforce that relies on high-volume cold calling using a sales-oriented approach might not be qualified to sell a new service that requires a consultative selling approach.