Investment analysis

What is the Difference Between a Feasibility Study and an Investment Analysis?

The difference between a feasibility study and an investment analysis is the time that they take to complete.

The feasibility study takes at least a year to complete, while an investment analysis can be completed in as little as six months.

While both analyses require similar data collection methods, there are different factors that determine how long each type of analysis will take to complete.

What is the difference between a feasibility study and an investment analysis?

Feasibility study: A feasibility study is used to determine if something is feasible, or possible. It’s a process that helps you assess the likelihood of success for your project.

Investment analysis: An investment analysis determines how much it would cost to implement your idea and how much benefit you’ll receive from it in return. It also shows you what kind of financial risk you’re taking by pursuing this idea, keeping in mind all the costs associated with getting started and running the business over time.

What is the difference between feasibility study and investment analysis?

A feasibility study focuses on identifying problems related to developing and implementing ideas so that they can be solved before proceeding further with an idea or product launch.

The goal of a feasibility study is simply to evaluate whether an idea has any chance of being successful if pursued further; an investment analysis aims at determining whether there will be any profits from pursuing such an endeavor (or otherwise).

Is it better to do a feasibility study first or an investment analysis first?

When a company decides to start a new project, it first has to analyze the feasibility of that project.

These two analyses are done in order:

  • Feasibility study – A preliminary assessment of the feasibility of a proposed project.
  • Investment analysis – A detailed investigation of the financial aspects of a project.

The feasibility study is done before an investment analysis because you need to know if it’s even worth your money before spending more time and resources on it.

What factors should you consider when choosing which study to perform?

1. Cost

How much does the study cost? Is it a reasonable amount, or are you being ripped off by the consultant?

2. Time

How long will it take to get the results back from your feasibility study and investment analysis?

3. Data availability

Does your company have all of the data required for these studies, or do you need to collect additional information before conducting them (and how big of a delay will this cause)?

4. Team experience

Do you have an in-house team that can conduct these types of studies, or do they need to be outsourced and paid for by someone else (i.e., another firm)?

5. Feasibility of your project

What is its feasibility (how likely is it that this project will succeed)?

How many people should be on the team for each study?

For a feasibility study, you’ll need a small team. This will probably be made up of you and one or two other people who have relevant skills.

For example, if you’re conducting an investment analysis for a proposed hotel in Paris, then you’ll want to include someone with expertise in hospitality management as well as someone who has experience in developing real estate projects and marketing them to investors.

For an investment analysis, the team should be larger—around five people for each study phase. The number of people involved in each phase depends on the complexity of the project being analyzed:

  • Phase 1: Conceptual Design

A minimum of 5-7 people would be ideal for this phase including architects, engineers (civil/structural), etc. depending on specific requirements.

  • Phase 2: Detailed Design

A minimum of 10-15 people would be ideal including all disciplines mentioned above plus others such as quantity surveyors/cost managers etc., depending on specific requirements

What types of questions are answered in each study?

A feasibility study is a type of report that provides an assessment of whether or not a project or initiative will be successful.

The main purpose of a feasibility study is to determine if there is sufficient demand for the product or service being considered, and also whether or not there are any technical barriers that would prevent it from being produced.

In contrast to this, an investment analysis focuses on answering questions about the financial viability of a project.

This can include things like how much money would need to be spent on research and development before production begins, how much money could be earned from selling your product after it hits the market, and what sort of risks might exist with going into business in the first place (e.g., losing all your savings if something goes wrong).

What are some common mistakes made in both studies?

Both studies can be challenging to conduct, requiring a strong understanding of the market and careful analysis.

The biggest mistake that people make when conducting both a feasibility study and an investment analysis is not setting proper expectations for themselves or their team members.

It’s important to know what you’re getting yourself into before you dive into either type of study. If your goal is to become more familiar with these types of analyses, it may be useful to start with something easier like market research or a SWOT analysis before moving on to feasibility studies or investment analyses. You can also check out this guide on how to find the right financial partners for your next project!

What are some benefits of performing both studies together?

First, it’s important to remember that feasibility studies and investment analyses are not the same things.

A feasibility study is a detailed analysis of whether or not a project can be completed successfully; an investment analysis looks at how much money you should invest in order to make sure that the project succeeds.

For example, let’s say that you want to build an office building on prime real estate in downtown Manhattan, but you’re not sure if there will be enough demand for it.

Using a feasibility study, we could examine what our competitors have done recently with similar projects and determine whether or not they were successful—and base our decision on this data.

We could also use our results from this study as part of an investment analysis: if demand for office space was high (or low) enough for your competitor’s buildings near yours, then we might assume there would be sufficient interest in yours as well—and therefore recommend that you go ahead with construction!

How can you make sure that your team members have the necessary skills to complete each study properly?

Since you are managing the project, it’s very important to make sure that your team members have the necessary skills to complete each study properly.

If you don’t, then your entire project will be at risk.

In order to do this, we recommend that you have a checklist of tasks that need to be completed for each study (feasibility or investment analysis). The checklist should include:

  1. What type of data do we need before beginning?
  2. Who needs access and authorization levels?
  3. How long will it take before starting this task?

How do you know if your results are valid and reliable so that they will be accepted by decision-makers?

If you find that your results are not valid or reliable, you may need to go back and tweak the model.

There are a few ways to check for validity and reliability in your study:

  • Take a look at the assumptions in your model.

To be valid, all of your assumptions must be correct. If they’re not, this will affect the final results of the study and make them less trustworthy.

  • Use another person’s input into testing whether or not it’s reliable enough to use as part of an investment analysis or feasibility report.

If someone else has input into checking these things out with you, then they can help ensure that there aren’t any major problems with either assumptions or calculations like rounding errors that could affect how accurate everything turns out when it comes time for decision-makers’ feedback on whether or not an idea is worth pursuing further along down road lines.

Bottom Line

If you’re not sure which study to perform first, we recommend conducting both a feasibility study and an investment analysis.

Together, these two studies will provide more complete information about your project than either one could on its own. The key is to choose the right team members for each study so that they can provide the most accurate information possible.


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