Project Feasibility Analysis: How Does It Work And How To Do It?

By Gretchen Clarke- Aug 04, 2022 164

A big challenge for those who want to market is the possibility of failure once the product is launched. That is, the business may not get the desired return or may face a loss. 

But did you know that there is a way to predict the project before it develops? By analyzing the feasibility of the project, it is possible to understand whether it is a good choice for implementing the plans. 

The feasibility study of a project is an innate element of all of them. It doesn't matter what kind of project it is, be it a software initiative, educational project, or construction project. Analyzing the feasibility of a project is more important than planning, and to get it done, a thorough investigation is essential. 

This analysis will allow you to gain knowledge about whether the project will bring the expected benefits. It is not a general bureaucratic formality, it is a necessary tool for strategic decision-making. 

Want to know how to adopt this strategy? In this post, you will understand how project feasibility analysis can make a difference for your business!


What is project feasibility analysis and what is it for?

The project feasibility analysis includes a study that evaluates some factors and considers whether it is worthwhile to invest in a new business or a new offer for the company. These include: 

      Acceptance of a product or service by the target audience;

      Project return estimates;

      Market size.


These assessments are conducted using tools and strategies that help verify asset availability (financial and physical) and earning opportunities. From this study, it is also possible to make predictions about payment times.


For example, a new manufacturing process is needed to predict the launch of a product on the market. The company must consider purchasing raw materials, adequate equipment, hiring special staff, and other issues.


These systems come at a cost and require specific manufacturing dynamics. Thus, when analyzing the feasibility of the project, the company has a basis to consider whether the product is effective and whether it is possible to implement the concept with greater confidence.


In fact, feasibility analysis can be used not only for the development phase of the project but also for companies, products, and services already on the market. In this way what they expect can be verified.


Thus, the main objective of project feasibility analysis is to avoid waste age of time, energy, and money.


What are the benefits of project performance analysis?

Now that you know what project feasibility analysis is, you can understand the benefits of implementing this research in your company. The main ones are: 

      Create more effective strategic plans;

      Business decision-making optimization;

      Measurement of return on investment (ROI);

      Forecasting the future of the project;

      Loss and gain identification;

      Save financial resources and time.


How to apply to your company?

Once you understand more about the benefits of project feasibility analysis, you'll probably be interested in learning more about how to apply this research to your organization. 

Below, see the main steps of this analysis!


Understand the market

First, you need to know the market niche where the project will be located. That way, try to find out who your direct and indirect competitors are, what your target audience wants, and if the proposed product or service can alleviate your customer's frustration.


To help with this reflection, answer the following questions: 

      Who is the ideal customer for your business?

      How does your business, product, or service create value for your consumer?

      Can the project solve any problems of your clients?

      What is the revenue potential of your product for the company?

      What is the average product ticket of the contestant?

      What is the competitive edge of your business?



After analyzing the market, it is time to earn revenue. In other words, predict your business's chances of raising money. If the project is promising, the move is important to attract investors.


It is noteworthy that when presenting revenue, it is essential to keep in mind the least favorable situation. After all, every business is subject to less revenue time, so it is essential to consider this factor.


To prepare this projection, you need to know the market volume that your business has entered. This way, you can pre-define the percentage of potential customers and, as a result, estimate the price of the product or service.



In addition to revenue estimates, you must prepare expenditure estimates. In this case, you should include specific and variable costs and estimate how and how much they may change over the next few months.


For example, if your project is to open an actual store or a branch, you will need to rent a property. Also to property-related costs, rents and other expenses will have to increase in subsequent years.



Cash flow can be defined as a tool that allows a company to better view its financial transactions. Thus, it records all cash flows and outflows from the business.


Through this, it is possible to know what balance is, see opportunities and understand where to raise funds. Thus, it is important to prepare cash flow estimates, which differentiate between revenue and expenditure estimates.



Finally, there are some indicators that need to be analyzed to determine if your project is effective for the company. Understanding:


      Minimum Attraction Rate (TMA): Obtained by calculating the minimum value of a possible return on investment;

      Net Present Value (NPV): The future cash flow of future investments. In this way, it is possible to estimate the future income of the business;

      Internal Rate of Return (IRR): Used to analyze the percentage of return in a project;

      Payment: Estimates the net profit of an investment equal to the amount invested.

Remember that the feasibility study of a project is not a bureaucratic process but a way of thinking. To maximize its usability, it is important to have adequate details to ensure the continuity of the next phase of the project, to evaluate what has been provided to facilitate the application of comparative analysis in preparation for the final project audit, which was a comparatively proposed feasibility study.

How to know if a project is viable or not?

A feasibility study makes it possible to find out if the initiative is possible. For this, different perspectives are analyzed, such as technical, economic, or legal. The results of this study make it possible to test whether the investment is worthwhile.


Although each project differs in its purpose, needs, and opportunities, it is a common divider in terms of its internal and external factors that determine its success. Some of them are project leadership, availability of resources, existing infrastructure, public needs, and regulations, which will affect the health and long-term nature of the project and therefore its effectiveness.


To answer questions about resources or availability, a project feasibility study should provide visibility at the technical level; This clarifies the long-term income-generating potential of the project, eliminating financial doubts. In complementary ways, additional analyzes may be applied that take into account environmental, compliance, political, or cultural issues.


Based on this information, you have learned the importance of project feasibility analysis. Through this study, it is possible to consider whether the business is sustainable and whether it will be profitable. Thus, it is possible to avoid allocating resources to implement ideas with little chance of success.


Want to understand how to stand out in the market? Set your company at the top position from the competition with Influencer Marketing. Join us for information about it. Grow your business with the best marketing strategy online.