How to Create a Feasibility Report for Project Management

SUMMARY: A feasibility report or feasibility study will analyze a project’s potential during the planning stage, before significant resources and investment have been committed. This living document helps inform risk management, budget management, resource allocation, and much more.

An ever-changing environment is guaranteed in many sectors of project management. To deal, PMs need to be as prepared as possible for unexpected trajectories. 

Especially in construction, architecture, and software development, PMs are expected to accurately assess project potential before it gets off the ground. .

This assessment is commonly referred to as a feasibility report or a feasibility study. A well-structured feasibility study is a powerful tool for risk management, providing a systematic evaluation of a project's projected success. 

The feasibility report scrutinizes various facets of the project, from technical and economic considerations to operational and scheduling intricacies.

The goal is to provide a data-driven foundation for informed decision-making before work on the project kicks off. 

Read on to find out how you can create a feasibility report for your next project, and if you want, how to get AI to do it for you. 

What is a feasibility report in project management?

A feasibility report, a document that contains different feasibility studies, is a comprehensive analysis that investigates the potential success of a proposed project. 

As the name of the document suggests, it examines the project's practicality, profitability, and overall potential, considering both internal and external factors. 

Professionals across many sectors, including construction managers, architects, software developers, and business analysts, use feasibility reports to guide their project management at both the macro and micro levels. 

The purpose of a feasibility study is to provide a detailed, structured analysis of a project's potential success before substantial resources are committed. 

By examining technical, economic, legal, operational, and scheduling aspects, project leaders can gain insights into potential risks and benefits. 

Project managers will create feasibility reports to determine if a project aligns with strategic goals, to optimize resource allocation, and to empower decision-making among stakeholders, minimizing the likelihood of costly failures. 

The feasibility report is a highly pragmatic tool because it can ultimately help leaders decide whether a project should proceed, be modified, or be abandoned. This analysis is non-negotiable for the risk management of many large-scale projects.

Benefits of creating a feasibility report

Feasibility reports can be used as a strategic instrument to drive project success. These analyses empower leaders to manage risk, optimize resources, create alignment, increase profitability, and reinforce strategic objectives, laying a robust foundation for project excellence.

Risk mitigation

A feasibility report systematically identifies potential obstacles and challenges early in the project lifecycle. By thoroughly evaluating technical, economic, and operational aspects, leaders can uncover potential vulnerabilities that could impede project success. 

This proactive identification means project managers can develop contingency plans and implement specific risk mitigation strategies.

Feasibility reports thereby can help minimize the impact of unforeseen issues, safeguarding timelines and profitability. These documents often lay the groundwork for proactive risk mitigation strategies. 

Resource optimization

Feasibility reports can help significantly improve resource optimization by providing a detailed analysis of the project's requirements. 

Project managers can then accurately estimate the necessary resources, including personnel, materials, and equipment needed to complete the project or the next phase of the project. 

Insights into technical and operational feasibility help to align resource deployment with project needs, making sure that resources are used efficiently and effectively throughout the project lifecycle. 

This structured approach to resource management leads to improved project efficiency, reduced costs, and better project profit margins.

Stakeholder alignment

Creating a comprehensive feasibility report can help promote stakeholder alignment by providing a transparent and data-driven foundation for project decisions. 

The detailed analysis of technical, economic, and operational aspects allows stakeholders to intimately understand the project's potential benefits and risks from the start. Because it’s a  clear, objective assessment, a feasibility report minimizes ambiguity and promotes more informed discussions. 

This shared understanding can help create consensus among stakeholders, so that everyone is aligned with the project's goals and objectives. 

The report also serves as a central document for communication, where stakeholders can track progress and make informed contributions throughout the lifecycle of the project. 

This collaborative approach builds trust, transparency, and stronger relationships, ultimately leading to more successful project outcomes.

Project profitability

A well-crafted feasibility report directly contributes to increased project profitability by providing a rigorous financial analysis. It evaluates the project's potential revenue streams, cost projections, and return on investment, helping PMs make better resource and budget decisions. 

By flagging potential cost overruns and revenue shortfalls early on, the feasibility report can help project managers make proactive adjustments to the planning as needed. 

Furthermore, it can help leaders prioritize high-value activities that contribute to maximum profitability. Insights into market demand and competitive analysis also help project managers to optimize pricing strategies and market positioning. 

By safeguarding the financial viability of the project, a feasibility report can significantly increase a project’s potential for profitability.

Strategic alignment

One of the goals of a feasibility report is to verify that proposed projects directly support the organization's overarching goals. That’s why it meticulously analyzes project objectives in relation to the company's strategic vision, clarifying how it contributes to long-term success. 

A feasibility report will specifically examine the project's alignment with market trends, competitive advantages, and resource capabilities. In the end, it should confirm that the project is not only viable but also strategically sound. 

This process helps prioritize projects with the greatest strategic value, preventing resource allocation to initiatives that deviate from core objectives. 

Remember a feasibility report is also a tool for communication, where stakeholders can grasp the project's strategic importance and how it fits into the broader organizational context. 

Different types of feasibility studies

There are different types of feasibility studies with different components that will measure various aspects of the project’s potential. Here are the most common:

Technical feasibility

A technical feasibility report assesses the availability and suitability of technical resources required to successfully complete a project. It looks at whether the organization either possesses or can acquire the necessary technology, infrastructure, and expertise. 

For a software development project, this report would include evaluations of required programming languages, hardware specifications, software licensing, and the team's technical skill set. 

It would also need to address potential technical challenges, such as integration issues, scalability concerns, and security vulnerabilities, along with proposed solutions.

Economic feasibility

This analysis will help determine if the project can generate sufficient returns to justify the investment. 

An economic feasibility study for a construction project would incorporate detailed cost estimates for materials, labor, land acquisition, and permits, as well as projected revenue from sales or rentals. 

It would also include a comprehensive financial analysis, such as a cost-benefit analysis, return on investment (ROI) calculations, and a break-even analysis, to assess the project's profitability and financial sustainability.

Legal feasibility

A legal feasibility report evaluates the legal and regulatory landscape surrounding a large-scale project, ensuring compliance and minimizing potential legal risks. 

This report will include an analysis of relevant laws, regulations, permits, and zoning requirements applicable to the project's location and industry. 

Legal feasibility studies must also identify potential legal challenges, i.e. environmental impact assessments, contractual obligations, and intellectual property rights. They will then outline specific strategies to mitigate these risks and safeguard the project's legal viability .

Operational feasibility

For a project manager, this report will need to evaluate the project's impact on workflow, staffing requirements, and resource allocation. 

It includes an analysis of whether the project can be integrated seamlessly into current operations, considering factors like team skills, organizational structure, and infrastructure capacity. 

An operational feasibility report will also address potential operational challenges, process inefficiencies, and training needs, detailing further strategies for smooth implementation and ongoing support.

Scheduling feasibility

A scheduling feasibility study examines the practicality of completing a project within a specified timeframe, making sure that milestones and deadlines are achievable. 

This report meticulously analyzes a project's timeline, identifying critical paths and potential bottlenecks. It includes a detailed breakdown of tasks, dependencies, and resource availability, along with a realistic assessment of potential delays or disruptions. 

Project managers will need to address strategies for time management, resource leveling, and contingency planning within the body of the scheduling feasibility report. This also doubles as a comprehensive project roadmap in some cases. 

Example of what’s included in a feasibility report

Each feasibility study includes detailed analyses, data, and recommendations, providing a holistic view of the project's potential. Here’s a simple example:

Consider a scenario for a potential software development project that creates a new mobile application for project management. In this case, the feasibility studies might include:

Technical Feasibility - An evaluation of the required programming languages, development tools, and server infrastructure.

Economic Feasibility - A cost-benefit analysis, including development costs, marketing expenses, and projected revenue.

Legal Feasibility - A review of data privacy regulations and intellectual property rights.

Operational Feasibility - An assessment of the team's capacity to manage the project and provide ongoing support.

Scheduling Feasibility - A detailed project timeline, including milestones for development, testing, and launch.

See how this comprehensive analysis would provide stakeholders with a clear understanding of the project's potential success and associated risks? 

When should you create a feasibility report for a project?

The feasibility study should be drafted early in the project lifecycle, ideally during the project initiation phase before significant resources are committed. 

Feasibility reports are particularly crucial for projects involving substantial investments, complex technologies, or high levels of risk and uncertainty. Regular reviews of the feasibility study throughout the project lifecycle are also recommended to address evolving circumstances.

Can you use AI to make a project feasibility report?

Oh yes, yes you can. But which AI model you choose and your prompt engineering skills are going to come into play. 

You can theoretically use a non-specific generative AI tool like ChatGPT to make a project feasibility report, but it may involve workarounds on your part to make sure your data is clean. 

The best AI tools for creating a project feasibility report are going to be those that are already trained to do project management related tasks. 

These days, you can find these tools in the form of an AI assistant built-in with your project management software. That way, all your project data is already there.

From here, it’s up to you to instruct AI the right way to put together your project feasibility report effectively. This is called prompt engineering, but it will be easier with an AI copilot native to your project management solution versus a broader LLM.

In sum: The role of feasibility studies in project management

The role of feasibility studies in project management is critical for large projects in construction and across a diverse set of industries.

By systematically evaluating project potential, these studies help mitigate risks, optimize resources, and promote informed decision-making as to whether or not the project is even worth the investment, for example. 

The feasibility report leaves no stone unturned, covering technical, economic, legal, operational, and scheduling aspects that impact the viability of the project. This helps provide a holistic view of project potential. 

WIth the dawn of the AI project manager, creating a feasibility report has never been easier. The adoption of AI tools like this can augment the efficiency and accuracy of these studies. 

Project managers continue to be encouraged to prioritize feasibility studies to drive project success and organizational growth.