viability

Knowledge

2022

We explain what feasibility is, including its technical and economic senses. Also, its relation to feasibility.

Feasibility is an important factor when deciding to invest in a project.

What is feasibility?

When we talk about the viability of an issue or a draft, we refer to how likely it is to carry out something, materialize it in the reality. Therefore, and depending on the context, viability may have to do with the physical, logical, economic or other possibilities (or even all of the above) that concern the project or the matter.

That is why determining the viability of a project before undertaking it is usually a conduct or aspiration related to different trades and professions, since no one would want to invest weather, effort and resources in a project that, from the outset, shows signs of not being able to be carried out.

There are even professions dedicated to it: to determine, for example, the margin of success (and therefore the margin of risk) that is in a project or in a investment. This is known as a "feasibility analysis."

Logically, the feasibility analysis should be carried out before the decision making, and it is usually an important factor to take into account when investing, having resources or even committing to a project.

Feasibility and feasibility

The difference between something feasible (that can be done) and something feasible (that could be done) is small but significant. Normally both terms are used as synonyms, but if we dig a little deeper, we will perceive the difference between one and the other.

Thus, the feasibility has to do with the traits objectives of a project, which show that it can in fact be done; while feasibility has to do with the circumstances, and suggests the probability that it can be done successfully. In other words, what is feasible is what can undoubtedly be done, while what is feasible is what, apparently, can be done.

Technical viability

Technical feasibility is a type of feasibility, determined from the technical elements of the project or issue. That is, those elements that have to do with the processes and mechanisms on which the project depends, as tools, knowledge specialized, Energy, etc.

Thus, when a project is technically feasible, this means that, from a strictly technical point of view, that is, taking into account knowledge and tools, it is highly likely that it can be carried out successfully.

For example: for a specialist in computers It is feasible to repair a damaged netbook, since you have the knowledge and tools (which is why we call it a "technical support"). That does not mean that it is 100% sure to fix it, but it does mean that, from a technical point of view, it has all the elements to make it so.

Economic feasibility

Similarly, economic viability has to do with the economic aspects of the project, that is, it refers to the resources capitals or financial, which will allow to start the project and / or acquire the elements that are needed. We refer, then, to the material resources necessary for the project.

For example: to start a canning factory, you need not only technical aspects, but also financial ones: capacity to financing through loans, debts or investors, or the company's own capital business, which may be those of their own founders, for example.

Also, it wouldn't make sense to start the factory without having the money to pay. wages, pay services (electricity, Water, etc.) and buy the machinery.

How is the viability of a project analyzed?

Analyzing the product is necessary to assess its viability.

There are very diverse methods to analyze the viability of a project, and each one proposes a different set of criteria: SWOT (Strengths, Opportunities, Difficulties and Threats), VIAPRO, PEST, PESTEL, are examples of possible analytical procedures.

However, everything analysis Feasibility is based, broadly, on a review of the project's fundamentals, which are generally approached from a three-fold perspective:

  • The product or service. It is an analysis of the characteristics of what is offered, that is, of the product that will be manufactured or the service that will be provided, taking into account its inherent properties (without taking into account the context): its quality, its versatility, its potential, its originality, etc.
  • The structure. It is about the analysis of the conduct of the project, that is, of the composition of its work teams, of the internal organization of its processes or of the way of conceiving the production methods. But the system of costs, payments and dividends that will sustain the project and allow it to be perpetuated over time, that is, the accounting analysis.
  • The market or environment. It involves the analysis of the context of the project, that is, of its market niche, its target audience and the historical conditions that accompany it. Every project has a real world in which to insert itself, and this must also be taken into account.
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