The project sounds great. Your staff is excited. You’re excited. You’re ready to push the “go” button and get underway. Then your boss asks that dreaded question: “Do you really think you can pull this off?”
If you’re not quite sure of the answer, now is a great time to undertake a feasibility study. A feasibility study, in general, is a tool for determining whether you have what it takes to undertake a change or new project. In business, most managers make use of a particular feasibility tool called TELOS, an acronym for the five key areas that you need to consider in your study:
The TELOS model was first presented in 2007 by James A. Hall in his book, "Accounting Information Systems." It’s been adopted across a huge range of settings since then, because it offers a simple way to consider the most important issues related to feasibility, whether you’re considering a multinational pipeline or a small business project.
When NOT to Conduct a Feasibility Study
Under most circumstances, a feasibility study is a key step.
But not always. When don’t you need to bother with a feasibility study?
- You already know you’re going to move forward with the project, no matter what the feasibility study says. This happens surprisingly often, because the emotional lure of a new undertaking, new market, or new technology may outweigh the reality that the project may fail miserably.
- When you already know the project is feasible because it’s so small, or is so similar to other projects you’ve undertaken, that you already have the resources, skills, and information you need at your fingertips.
- You already know that the project is NOT feasible, because it requires an infrastructure, budget, or other resource that is not available to you at the moment.
- You have a general idea (expand into a larger storefront and hire more staff, for example) but you don’t yet have enough details (location, costs, staffing needs, etc.) to consider the feasibility of the project.
- You could determine the feasibility of the project by making a few phone calls to determine whether the costs, timeline, or resources required are outside your organizational scope.
- You don’t have the personnel or money to undertake an effective feasibility study. In most cases, it’s best to hire an outside study consultant (who is not already emotionally attached to the project concept), and such consultants don’t usually come cheap.
- You don’t have the time to undertake a feasibility before the project launches.
As you can probably see from this list, a feasibility study is really only useful if it is thorough, timely, and unbiased. If you really can’t conduct a study with these qualities, there’s no point in wasting time or money on a second rate study that is likely to simply tell you what you want to hear!
What Can a Feasibility Study Do for You?
Of course, the purpose of a feasibility study is to determine whether a project is… feasible. In other words, it helps you to determine what it would take to get the job done well, and it can help you analyze your ability to meet your standards. But there are more up sides as well.
The very process of putting your plans into writing is valuable. It forces you and your team to think through the logistics, planning, costs, and implementation timetable—and to seriously consider the implications of your idea. Thus, while you’re establishing the feasibility of a project, you’re also preparing the ground for putting your idea into action.
As you go through the process of a feasibility study, you’re also bound to discover opportunities for improving your plans to enhance marketability, lower costs, manage legal issues, and so forth. This outcome is very useful, as it smoothes the road ahead and lowers the chances that you’ll hit a snag right off the bat.
If you are planning to seek funding to support your plan, a feasibility report is a terrific document for inspiring confidence. "Yes," you can say, as you meet with your potential funder, “We did conduct a feasibility study, and here is the report to support our claims that we can complete this project successfully.”
How to Complete a Feasibility Study
If you are planning to work with outside counsel, your first task will be to identify a consulting firm that’s right for the job. Not only will you be looking for a firm that has experience with feasibility analysis (and TELOS in particular), but you’ll also want a consultant that knows your particular industry. That’s because so many people in the consulting world are specialists: they are right on top of IT, or healthcare, or transportation—but if you’re in the toy business, that’s not a whole lot of help! Yes, general business knowledge is useful, but there’s a big difference between undertaking a major IT restructuring and designing, prototyping, manufacturing, distributing, marketing, and selling a product.
But let’s say, for the sake of this conversation, that you’re part of a small enterprise with few funds for outsourced consulting needs. You’ve brought up the idea of undertaking a fascinating new project, and, as a result of sticking your neck out, you’ve been tasked with the job of studying its feasibility.
How Do You Start?
First, it’s very important to stay neutral. That may sound like a no-brainer, but it’s amazing how easy it is to interpret questionable numbers or significant challenges as “hurdles to leap” rather than as “objections to an otherwise interesting project.” If you don’t feel you can stay neutral, consider finding a colleague or team mate who understands the project well but doesn’t have a personal stake in making it happen. While that person may not do the leg work in collecting and organizing information, he or she should have an opportunity to review your findings and analysis to be sure that you haven’t allowed your enthusiasm for the project to taint your presentation of its likelihood for success.
Now, you’re ready to start on the five-step process of a TELOS feasibility study. This can be a very large project if you’re considering a major new enterprise—or a fairly small project if you’re thinking about making a relatively slight change to the status quo.
T, as You Know, Stands for Technology
The question you’re really asking here is “Can we build it? And, if we can’t, can we find and pay for the experts who CAN build it?” You’re also going to be considering the related question: “If it were built, would we know how to use it?”
As an example, imagine that you’re recommending the creation of a proprietary CMS for your marketing firm. This, you argue, would provide your team with precisely the tools they need to create the products in which you specialize. Even better, your in-house team and outsource freelancers would find it easy to collaborate, and your clients would know just where to find their work in progress.
Sounds great, but:
- Is there someone in-house who could create a CMS?
- If not, can you identify a contractor who could do it well?
- What would it cost to have a CMS created by a contractor—and how long would it take?
- What would it take to train your staff to use the new CMS, and what would training cost?
- Would you need any new hardware or software per workstation to make the CMS available to staff? What would that cost?
You may not have the answers to all these questions in hand, and it’s fine to ask for expert advice to provide you with realistic timelines and numbers.
E Stands for Economics
The questions in this section of the
study might include:
- Where is the money coming from to fund this wonderful new CMS? Is there sufficient money in the budget, or will you need to cut elsewhere or find outside funding?
- Will upper management support your project to the degree that they will make funding available?
- Given the costs of this project, is it worth the money relative to other high priority projects?
- Will a proprietary CMS save your company money, and/or attract new business?
For some types of projects (product development, for example), it may be worthwhile to prepare a cash-flow analysis to see when a break-even point will occur, and what kinds of profits are really likely in the long run. Again, if you are not a financial expert, you may need to find help for this portion of the process.
L Stands for Legal
At this point you need to ensure that your project does not break any laws. Obviously you’re not smuggling drugs out of the country or planning a bank heist, but you may have some issues to consider relative to, for example, patent or trademark law, international trade laws, existing contracts, agreements, confidentiality agreements, or more. For this portion of the project, you’ll probably need to consult with your company’s lawyer who should have the information you need to make an accurate judgment.
O Stands for Operational
It’s here that projects such as a new CMS may run into their biggest snags because… there are human beings involved. And if there’s one thing human beings hate, it’s change. It’s in this section of the TELOS that you’ll need to ask:
- Will we need to institute new procedures to make this new system successful? What are the ramifications of that?
- What kind of training will people need? What will it cost?
- Will we need new staff to, for example, to administer and troubleshoot this new CMS? If not, are we relying on our existing IT staff and/or outside consultants? Are there added ongoing costs involved, and, if so, what are those costs?
- Will this project have an operational impact on people outside of your own team? And, if so, is everyone else on board with the idea?
S is for Scheduling
Of course, scheduling relates to the amount of time required to plan, build, train for, and implement a new CMS. It also relates to the amount of extra time that might be involved during the actual development and implementation of a time-sensitive client project. Given a realistic look at the time it will take to make all this come to pass, and the challenges related to a change of technology for your team and clients, is it worth it?
Present Your Report and (With Luck!) Move Forward
Once you’ve completed your analysis, it’s time to write a report. As with any report, the acronym KISS (keep it simple, stupid!) says it all. Provide a one page executive summary with all of the major points you’ve covered with your TELOS analysis. Following that, one-page summary of your findings for each section of the analysis should cover all your major points. Append your spreadsheets, estimates, and other materials to your report, knowing that they will be read by very few people.
Before sharing your report, be sure to share it, first, with your neutral friend who can vet it for any obvious signs of bias.
If your project is a good one, and your plans are really supported by your feasibility study, chances are excellent that you’ll have a new CMS in hand before too long!
For more resources on TELOS and feasibility studies, visit the Iowa State University Extension website, which offers several articles on the definition, process, and usefulness of feasibility studies and TELOS.