A Guide to Feasibility Studies

A feasibility study considers all of the aspects of your project, including the availability of time and capacity, financial and other resources, market demand, as well as technical aspects to enable you to determine if you should take your project idea forward.

Feasibility studies can:

  • Provide a planning process to articulate project vision
  • Articulate the project context
  • Test project assumptions
  • Identify the scope of work
  • Estimate capital and operating budgets
  • Outline planning framework
  • Determine whether the project is feasible
  • Build confidence in the project internally and externally

There are many types of feasibility studies. For a complex or larger capital project, you may need to commission a series of studies to tackle different dimensions of the project, including:

  • Preliminary feasibility study
  • Architectural feasibility study
  • Project feasibility analysis
  • Market feasibility
  • Fundraising feasibility study

You should also bear in mind that complex or larger capital projects may require any number of technical and specific studies as the design development progresses. These might include, for example, traffic or acoustic studies. While these kinds of highly specialized studies may have the potential to impact one part of the project plan, they will not affect its overall feasibility.

You can find out more about this by reading A Guide to the Design Development Team.

Preliminary Project Feasibility
A preliminary feasibility study allows you to assess if a project idea is really viable before it has even reached the drawing board. During the early stages of a project, the feasibility study serves to test the project vision. After sufficient research has been done, key stakeholders have been engaged, and a project vision developed, the feasibility study is then used as a tool to examine all of the factors directly and indirectly associated with the project. The preliminary feasibility study has the potential to be the cold bucket of water, or the reality check that assesses viability against aspiration and project vision.

In some cases, a feasibility study can explore a range of options for a project to determine which one, if any, are the best approach. For example, in 2002, Artscape conducted a feasibility study for the Artscape Wychwood Barns, whereby several options for adaptive re-use of the Barns was presented and evaluated in the study. Each of the options were evaluated and recommendations were made for the most feasible options.

Artscape Wychwood Barns Feasibility Study

Hundreds of members of the local community were engaged, along with a volunteer Advisory Council and experts in heritage preservation, affordable housing, environmental sustainability and capital fundraising to identify and analyze common ideas, issues and concerns surrounding the Barns. The input was then used to craft goals and objectives for evaluating a range of re-use options. Those options were studied based on a number of criteria set out in the feasibility study and were presented in the feasibility study report.

Of the options studied, all but one was capable of generating enough revenue to sustain operations. Apart from the uses that the options served, they were distinguished by a number of other factors such as the level of capital investment required by the City, the degree to which they served the public interest or delivered benefits to the community and their potential to leverage resources from other levels of government and the private sector. The feasibility report revealed which of the options were feasible and provided recommendations for next steps.

Click here for a copy of the Wychwood Barns Feasibility Study.

Click here to read a Case Study of the Wychwood Barns

A feasibility study may not give you a simple yes or no to the question of vision viability.  The study may identify important areas of the project that will require a re-think, such as the size or location of a project. And while a feasibility study may give the project the green light, its recommendations may require some adjustment and refinements to the project vision.

What Do You Really Need to Know?
When you undertake a feasibility study, or select an expert consultant to do the work on your behalf, there are a number of important strategic, technical and organizational questions you need to answer before going forward with the project.

Strategic questions should include:

  • Is the need identified in the project vision real and is the project vision best framed to serve that need? You might consider if the approach to development (adaptive re-use/new build/renovation, etc.) is the best approach and assess the identified level of community support and market demand for the project.
  • Does the project make sense financially for both the pre-development and capital costs and for the ongoing operational commitment?
  • What are the alternatives that you should consider? This might include considering best practices from elsewhere, a review of potential sites/location and of the proposed business model.
  • What is most essential to delivering the project vision? What is non-negotiable in terms of location, site, space typologies, and operating assumptions?

Technical questions should include:

  • Is there likely to be capital funding available for the project within the expected time frame? From which sources?
  • Is financing likely to be made available to bridge or fill gaps in the capital budget? From which sources?
  • Is the project likely to be able to carry no or low capital debt in order to ensure operational affordability?
  • Is the project likely to have a sufficiently compelling narrative to attract the support of philanthropists?
  • Is there a plausible revenue model for operations? On what assumption is it based?
  • In the case of a preferred site or location, is it suitable for the proposed vision, use and business model?  Are there existing constraints or challenges associated with the site, for example zoning restrictions or contaminated land? How can these be dealt with?
  • Where no site has been selected, have a number of potential sites been identified and appraised, or is there a preferred site?

Organizational questions should include:

  • Do you have the organizational capacity and commitment to take this project on? What skills are missing in your organization right now and how might you address these gaps to support project development? Do you need to hire a Project Manager, for example, to manage the day-to-day design and development process?
  • Is your Board of Directors fully behind the project? Does it include experts in development, the law and finance to really support your work?
  • What is your capital fundraising capacity right now? Have you done the work to start bringing a range of stakeholders, partners and potential investors around the project vision?
  • Do you have the capacity to manage and operate the finished project?

Who Should Undertake a Feasibility Study and How Do I Pay For It?
Unless you have significant in-house capacity to cover the strategic, technical and practical/organizational elements of a feasibility study, you will almost certainly need to hire consultants to work with you on the project. You can select the team through an RFQ or an RFP process, and will most likely find yourself working with a team of specialists that may include cultural facility and business planning specialists, architects, engineers and appraisers.

A feasibility study can often be paid for via a grant. If this is the case, the expectation will be that external third party specialists (i.e. consultants) assess your project idea. Funding can also be taken from your organization’s own funds as Capital Works in Progress. You may need to do this to match a funding offer but If the project goes forward, the money is recuperated from funding for the development project. However, if the project doesn’t go ahead it gets expensed out of operations.

When Don’t You Need a Feasibility Study?
A feasibility study may not be required in rare cases where funders do not require them, when projects are small and straightforward, when the project lead has the internal and demonstrated capacity to analyze feasibility or when a detailed business plan can serve as a substitute.

You will find many templates and examples for feasibility studies available on the web. We have also provided a simple outline template based on our own experience over the years in undertaking feasibility studies both for our own and other organizations’ projects. Bear in mind that feasibility study funders may require that you hire a third-party expert to assess your project feasibility and that this may be a requirement of future capital funding. We strongly recommend that you check with your potential funders before deciding how to proceed.

Click here to download a Feasibility Study Template.