Managerial feasibility studies are a form of project analysis that look at every aspect of a proposal to determine its likelihood of success before commencing. These types of studies take an objective look at the strengths and weaknesses of the proposed project to see how viable the idea is in terms of generating profit and meeting objectives. For more information about assessing business ideas, please visit the Ahmed Dahab Twitter page.
All activities that comprise a managerial feasibility study are geared towards answering the question “should this project go ahead?” A feasibility study is usually completed before a business plan – the PDF attachment explores the differences between the two.
Components of a Managerial Feasibility Study
A managerial feasibility study is comprised of several components which together should provide an objective overview of the business proposal, including both positive and negative factors. This type of study begins by outlining the proposed venture, along with suggestions for possible alternatives.
New opportunities may be uncovered during the investigative process necessary to carry out a managerial feasibility study. Potential reasons not to proceed will also be identified, which means plans to mitigate risk can be put into place before the project commences if possible, or alterations can be made to the proposal to make it more viable.
A history of the business; an overview of the market conditions; a description of any products or services that will be offered; a financial analysis; any legal requirements and ramifications; any tax obligations; and details of management and operations are all parts of a managerial feasibility study. Should the feasibility study determine that the project is to go ahead, the following stages would be technical development and then implementation of the project.
Some of the benefits of completing a managerial feasibility study can be found in the embedded infographic.
Managerial Feasibility Study Functions
A managerial feasibility study performs several key functions in the early stages of a new business or project. It includes a detailed project specification, which acts as a foundation for project guidelines and can provide insights to management regarding exactly what is required, including financial investment, human resources, materials, equipment, hardware, software and more.
A cost benefit analysis should be included in a managerial feasibility study, which shows precisely what the costs will be both at the start-up phase and as continuing outgoings, comparing these to the forecast revenue generated by the project. This shows management how soon they can expect the project to begin generating profit and also ensures they are prepared for the project economically.
The managerial feasibility report then analyses the individual feasibility of all the different aspects of getting the project off the ground, including technical, operational, economic, social, legal, time and management feasibility.
The impact of a project can also be considered as part of a managerial feasibility study. This can include the impact on society, the economy, the environment or culture. These types of impacts will affect how stakeholders and potential investors view the project.
While profit is usually the ultimate aim, many investors are more likely to choose projects that have an impact in other areas as well, such as those that generate a measurable benefit for the environment, for local communities or in other areas. The short video explains impact investing in a little more detail.
Businesses can also include the tax they will pay the government as an impact, as this money can be reinvested in the nation’s infrastructure.