Viability (Meaning and Explanation)

We explain what viability is, including its technical and economic meanings. Also, its relationship with feasibility.

What is feasibility?

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

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

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

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

See also: Scope and limitations of a project

Feasibility and viability

The difference between something feasible (that can be done) and something viable (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.

Technical feasibility

Technical feasibility is a type of feasibility, determined from the technical elements of the project or the matter. That is, those elements that have to do with the processes and mechanisms on which the project depends, such as tools, expertise, energyetc.

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

For example: it is feasible for a computer specialist to repair a broken netbook, given that he or she has the knowledge and tools (that is why we call it “technical support”). That does not mean that it is 100% sure that it will fix it, but it does mean that, from a technical point of view, it has all the elements to do so.

Economic viability

Similarly, economic viability has to do with the economic aspects of the project, that is, refers to the capital or financial resources, which will allow the project to be launched and/or acquire the elements that are needed. We are referring, therefore, to the material resources necessary for the project.

For example: to start a canning factory, not only technical aspects are needed, but also economic aspects: financing capacity through loans, debts or investors, or the company's own capital, which may be its own. founders, for example.

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Furthermore, it would make no sense to start the factory without having the money to pay salaries, pay for utilities (electricity, water, etc.) and buy the machinery.

How is the viability of a project analyzed?

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

However, any feasibility analysis is based, broadly speaking, on the review of the very foundations of the project, which are generally approached from a triple 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 involves the analysis of the management of the project, that is, the composition of its work teams, the internal organization of its processes or the way of conceiving production methods. But it also takes into account 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, 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.