A quick intro to technical feasibility studies

A feasibility study is an assessment to help you decide whether your intended project is practical. The technical aspect of a feasibility study helps you determine the viability of your proposed project by examining the tools at your disposal and the costs required compared to consumer demand for this technology. These details include necessary materials and labor, logistics of the project and technology related to producing, delivering and tracking the products or services you intend to develop. 

A technical feasibility study can serve as a great planning tool by providing an overview of how your project can evolve during the course of its development. The results of the study also require you to troubleshoot potential problems and track the progress of your project from concept to reality. 

What is a technical feasibility example?

Technical feasibility studies require you to evaluate the viability of architecture and design ideas required to execute a project. There are various types of technical feasibility all contributing to whether the implementation of a technological process or new technology within your company is worthwhile and possible. 

Common types of technical feasibility include: 

• Infrastructure functionality and performance 
• Architectural peer review process for functionality 
• Compliance with industry standards and regulations 
• Equipment capabilities and performance 
• Proof of concept testing 
• Facilities that support project needs 
• Data that supports the implementation of the technology 
• Operational risk assessments 
• Integration of systems and applications 

When considering whether to implement new technology or technical processes in your company, it’s critical to conduct a thorough technical feasibility study to evaluate the practicality of the technology in some or all of these areas. 

Related: How to Conduct an Employee Evaluation

How to conduct a technical feasibility study

Follow these steps to conduct your technical feasibility study and assess whether the proposed technical project is viable for your business.   

1. Prepare a preliminary analysis
2. Create a projected income statement
3. Conduct a market survey
4. Make a business plan
5. Prepare a balance sheet
6. Review your data and make a decision 

1. Prepare a preliminary analysis 

A preliminary analysis can help you determine whether your project is worth funding in the first place. Performing a brief analysis before moving ahead with a full study helps you identify potentially costly and time-consuming activities before the time and money are spent. The two main branches of this analysis include the following:

• Project outline: With as much detail as possible, describe the necessary elements of the project. These can include who your target markets will be, what need you’ll fulfill, whether your product or service currently exists and how you will improve existing offerings.
• Investigation of accessibility: Examine possible barriers to entry or any factors that could hinder profitability. These can include unavailable or especially expensive capital requirements, an inability to market or refer your offerings or production costs that exceed projected revenues. 

If the results of your preliminary analysis are promising, consider continuing with a more in-depth feasibility study of the project.  

2. Create a projected income statement

A projected income statement for your technical product or service offers a quick look at forecasted sales and revenue from moving ahead with the project. If your preliminary analysis determined your product or service will fulfill a need, use the projected income statement to anticipate the income the project will generate and compare it to the costs of producing your offerings, paying your debts and maintaining normal business operations. If your anticipated net income is positive, continue to the next phase in your study. 

3. Conduct a market survey

A market survey will help you get a more realistic idea of the revenues your project will generate. Since this is an in-depth study, the market survey will require several steps, including: 

• Consider population and demographic trends: Look at cultural aspects and the average amount of disposable income of consumers in your target market. The amount consumers are willing to spend on this technology will affect your project’s success. 
• Evaluate similar or competing offerings in your target market: This includes their strengths and weaknesses related to location, products, pricing, marketing, quality and customer loyalty.
• Estimate expansion opportunities: This includes adding new products or services, franchising possibilities and projected response by the community.

4. Make a business plan

A business plan describes your product or service offerings in detail and outlines a production schedule. The plan offers explanations for startup expenses and the cost of ongoing operations. It also provides detailed planning in regards to the following:  

• Organizational chart
• Materials, equipment and supplies
• Marketing and merchandising
• Facility location
• Labor costs
• Overhead such as insurance, taxes and utilities 

5. Prepare a balance sheet

A day-one balance sheet should show the assets and liabilities of the undertaking at the time of project completion before income is generated. Required assets include the project’s initial cash and financing capital as well as buildings, land and equipment needed to execute the proposed plan. Liabilities associated with the project involve anticipated investments, rent, finance payments and allowance margins for accounts receivable.

6. Review your data and make a decision

When you’ve conducted all your research and compiled your facts and estimations, a final review is necessary. This final review serves to revisit the preliminary analysis and compare it to the data you’ve obtained since then for the purpose of deciding whether your project is still feasible. This reflection helps you assess the risks and costs associated with this undertaking and make a final decision on whether to begin production. The last step in making a decision regarding whether to move forward with your project involves asking the following questions:

• Do the analyses show that this project will generate the minimum profitable ROI?
• Does this project have growth potential?
• Does potential reward (income, growth and market share) outweigh the risks (time, energy and monetary costs)?

Answering ‘yes’ to all three of these questions indicates that your project has a good chance of succeeding.  

Related: How to Grow Your Business 

Simplify the process with a technical feasibility report template

When you complete the technical feasibility study and have results you feel confident in, it’s time to collate the data into a single document that’s easy for necessary parties to review. Make use of a feasibility report template where you can outline the project parameters, identify potential problems and expand on solutions to those issues. Using an editable template ensures consistency in your company’s documentation of the technical feasibility study results and makes it easier for project leaders to efficiently review data and make decisions about whether the proposed projects should move forward. 

Technical Feasibility Study Templates for PDF & Word

Download these feasibility study templates to help determine whether your project is practical before you get started.

*Indeed provides these examples as a courtesy to users of this site. Please note that we are not your HR or legal adviser, and none of these documents reflect current labor or employment regulations.