Conducting feasibility studies on potential projects that have a high value in terms of cost is a practice that organizations have embraced to ensure that the anticipated business benefit is clear up front as well as ensuring that accountability established early. However, the business planning and analysis that goes into the development of a feasibility study, with complicated calculations such as net present value and internal rate of return, are challenging endeavors. They require resources with advanced degrees in fields such as finance as well as a strong business accumen across the enterprise to make it happen.
In certain instances the costs associated with undertaking a feasibility study in a large organization and a high value project can often be greater than a project in a smaller organization. As such, firms that operate in the SMB space often shy away from such efforts due to the perceived challenges ranging from resource available to cost considerations.
The question however is can an organization in the SMB space really launch a project without performing a certain amount of quantitative due diligence to justify the expenditure? Certainly I am not talking about projects that would be considered low value in an SMB, instead I am referring to mission critical projects that will likely involve the expenditure of significant funds and the commitment of resources (relative to the size of the organization that is).
Indeed a project that may be seen as a massive project in an SMB (say a value of $1M) can be considered a small undertaking by a giant corporation. However, the impact of success or failure of a mission critical project on the organization is ultimately the same. Whether the organization has 10 employees or 100,000 staff members, a potential mission critical project can result in the very survival of the organization.
While SMBs may not be positioned to house an extensive business planning model and foot the bill for senior level staff capable of these activities, carrying out a feasibility study (even if it is a qualitative one) is a must. Before the organization is willing to commit to these perceived high value project there has to be a solid basis for the project. It can not be simply based on intuition. Mechanisms need to be put in place as part of the overall framework for managing projects to evaluate, select, prioritize, and govern projects. Without these mechanisms the SMB will not be able to fully realize the benefits of project management.