Although in principle it is possible for a project group member to conduct the feasibility study, normally, an outside consultant is hired to do it. Most prospective members and financiers view an objective evaluation of a project concept via an outside practitioner as important. This objectivity often provides a group with helpful information that might have been overlooked by one who is participating directly in the project.

Hiring a consultant to create a feasibility study is an important decision, and thus the steering committee or group must use care when selecting that person (or firm). In practice, consultants have differing levels of ability and usually a consultant will be strong on some points and weaker on others. The key is to select a feasibility practitioner who is skilled in cooperative development and versed in areas relevant to the type of project.

Figure 4 provides possible criteria to use for selecting a qualified consultant. The steering committee will need to determine if a consultant is technically proficient enough to undertake a feasibility study and whether he or she has significant experience in doing so. The committee should review samples of previously prepared studies and speak with others for whom the person or firm has worked before contracting with them. It is important that a consultant have the traits required to work well within group situations.

Consultants should have experience in the industry under study. Otherwise they may not correctly identify critical factors. Given business complexity, it is almost impossible for one person to have experience in all areas. Some consulting firms resolve this issue by having their feasibility specialist work with contracted industry experts. In any case, it is important to research many sources for all the pertinent information possible about an industry.

A team approach may, in some instances, be utilized to develop a study. For example, a cooperative development specialist from the USDA or a practitioner from a cooperative development center could work jointly with industry specialists to create a feasibility study.

The consultant should also understand the unique aspects of cooperatives. Tax implications, distribution of net margins (profits), management, and other business considerations (e.g., governance) of cooperatives differ from those of other businesses and the nuances of each must be properly presented.

The consultant should avoid preconceived notions about how the project will function. The study should not be an "off-the-shelf" document assembled from previously created studies. Rather, the consultant should pay particular attention to the ideas that the group has developed and craft a unique study suited to the group's needs. The consultant should work closely with the group and be receptive to its suggestions. Also, the consultant should be prepared to make technical revisions or to correct errors given group recommendations and wishes. Revisions are a normal part of the study development process. Revisions should focus on the validity of the assumptions and the technical design of the study.

Using an outside consultant brings objectivity to the feasibility study rather than merely providing the results that the group wants. Consultants have a legal obligation to provide a responsible analysis. They should not be asked to alter the results merely to conform to members' desires for a project's viability.

Timeliness is an important consideration when selecting a consultant. Projects are time sensitive. Usually, decisions to proceed await information provided in the feasibility study. So care and diligence required for a well-crafted study must be balanced against the desire for speed. A qualified consultant must be able to complete a well-designed study within a time-frame that serves the group's needs. On the other hand, the timeline must be realistic. And, a consultant can only progress as fast as a group makes the required decisions, provides information to the consultant, and carries out its other project responsibilities.

Cost is an important factor. The expertise and skills that consultants offer a project must be weighed against their cost. A quicker timeline could increase a consultant's fee. Preparing a pre-feasibility analysis may decrease the effort required to complete the feasibility study and reduce the cost.

Some public programs offered by the USDA's Rural Business-Cooperative Service, community development offices, the Small Business Administration, some cooperative development centers, and local business incubator programs provide technical assistance at little or no cost to groups creating feasibility studies. There are also grant programs available such as USDA's Value-Added Producer Grants program, which can provide funding for a feasibility study if a project meets the program's criteria and is selected. This program requires a one-to-one matching contribution from the applicant.

A consultant should provide the data used to generate the financial tables and scenarios reported in the feasibility study and, preferably, an electronic spreadsheet format that can be easily manipulated. Although requesting this information can moderately increase the cost of a feasibility study, access to the actual data permits the group to use the information for later needs with greater flexibility. This data can also reduce the cost of creating the business plan, if the group proceeds to that stage. Additionally, it can decrease the effort required for revisions, if in the future the group changes the project's assumptions to differ from those in the study.

Once the consultant has been selected, the group should provide detailed instructions on the study requirements. There should be a legally binding contract between the parties. The group should consult legal counsel for assistance. The contract should state clearly the requirements and role of both the group and the consultant. It should have timelines, delivery dates, explicit deliverables, and what is to be accomplished before payment is made. Often, the consultant receives a downpayment before the feasibility study has been conducted. The balance is paid only after the study has been reviewed and accepted by the group (and possible financiers if appropriate). This gives the group more leverage to encourage timeliness or revisions. The contract should designate a third-party arbitrator to resolve any disputed items.

A complex, large-scale project may require several consultants to complete various aspects of the study. Multiple consultants can reduce the group's dependency on a single person or company. It also can permit the group to select experts from several fields. However, it also can complicate the coordination and consistency of the information received.

Before signing the contract, the group should discuss with the consultant arrangements for cost overruns, time delays, revisions, and what considerations will be made for these issues. Changes after signing the contract can be costly or delay the study results. All parties should be clear about what to expect prior to signing the contract and initiating the study. (See Appendix C for a point-award system for selecting a consultant based on select criteria.)