The rapid urbanization due to change in population demographics of the country resulting in housing developments for different purposes as continual reconfiguration of the built environment to meet society‟s needs. In this process, a feasibility study plays an important role prior to implementation and investment of projects by providing a basis for decisionmakers on whether a project is feasible or not. Urbanization has to get “right,” because decisions made today will have far- reaching implications for cities of tomorrow. This underlines that urban project developers must weigh the long-term costs and benefits when making investment decisions. However, in current practice, there is poor trend of allocating reasonable resources (budget, time, skilled labor) for conducting feasibility and preliminary engineering studies. Thus, this thesis aimed to assess current approach for developing a feasibility study in Bahir Dar. The study benchmarks current practice for conducting feasibility study of building projects in Bahir Dar against best practices and recommend changes. The thesis is performed by researching international and national literatures, desk studies of previous project proposals to develop a systematic approach. The study confirms that implementations of projects in Bahir Dar do not follow the principal methodology of feasibility analysis and there is large inconsistency of applied methodology. The study has outlined a systematic guideline for developing feasibility study of building projects with eight major activities including project overview, country/city outlook, market analysis, site evaluation, preliminary design, cost estimation, financial analysis, and feasibility analysis. Investment on rental residential apartment is also found viable with IRR 14% of and benefit to cost ratio of 1.86. Finally, the study recommended concerned stakeholders to properly handle a proposal document even after bureaucratic requirements are completed.