According to a report published by PM Solutions in 2011, an average of 37% projects fail every year. The report incorporated data from 163 companies which handled projects of at least $200 million annually, claiming $74 million at risk for each company. The study attributes the top reasons for this failure to unclear understanding of requirements, scope of project and also lack of proper planning on resource utilization. The result is that 80% of technology projects end up costing more than the actual earning.
How Can a Feasibility Study Help?
It’s very important to define the scope and size of a project before beginning with the project design process. The feasibility study meeting can be attended by the project manager, core team, stakeholders and technical advisors in order to analyze the objectives, requirements of the new systems, problems with the current system and constraints in the way of the solution. This information helps the team analyze the resource requirement, define schedules, plan operations and reduce risks associated with the project. A feasibility study is the perfect way of determining whether the project can be done within the specified time frame without exceeding the budget.
Apart from analyzing the risks associated with a project, a feasibility study also aims to maximize the resource usage and effort. These are some of the concerns that a feasibility study can raise:
You should use the feasibility study to determine if the proposed project is aligned to the department or organizations overall strategy. A project proposed that is adverse to or completely misaligned to the strategy should be an instant red flag.
- Technical feasibility of a project
Does the company have the technology to devise a solution for the project? If yes, whether the organization has the resources that are proficient in the particular domain?
Again the alignment and compatibility of the proposed technology with existing technology should be considered.
Are the benefits which the company is expecting from the project really worth the costs involved in its implementation? What are going to be the developmental and operational costs for the project and whether they leave a sizeable profit for the organization?
Can the organization raise the required funds to complete the project easily or will they be just able to scrape together the funds. If the later is true some serious consideration should be given to whether the project should go ahead given the statistics above on the number of projects that go over budget.
Feasibility testing makes it possible to develop an estimated schedule for the project and analyse whether the timeline can be achieved with the current resources and constraints. The test would also help find whether the company would need more time and subsequently finances for the implementation.
A feasibility study increases the chances of effective and efficient implementation of a project, thereby boosting the probability of having a greater ROI.
Advantages of Feasibility Study
The following are some of the advantages of performing a feasibility study prior to the initiation of the design and implementation phases:
- Addresses critical issues before the project is initiated
A feasibility study helps to identify dependencies in the planning process and other critical issues that the organization might face in the development. Brainstorming on these parameters before the operation begins can help an organization define turnarounds for the issues and reduce the risk associated with a project.
- Helps in the design process
One of the biggest advantages of a feasibility study is that the information gathered in the feasibility meeting actually helps the analysts define a design solution for the project. This information is bound to prove to be of immense use in all the stages, starting from implementation to testing the project.
- Meets the business objective
Feasibility study ensures that the solution in progress would actually meet the client’s objective and add value to his investment. If that is not the case, the whole effort adversely impacts the reputation of the organization.
By studying different aspects related to a project’s success, a project manager knows exactly how to work with his technical and business colleagues to deliver a functional solution, on time and within budget. A feasibility study is a perfect way of analyzing both the technical and commercial aspects related to a project before its development cycle begins.
A feasibility assessment can be revisited and carried out throughout the project as well if it is a long program of work. Many factors affecting or influencing the project can change over time, therefore also affecting the feasibility of the project.
What are your thoughts on how effectively organizations carry out feasibility studies on projects?
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