Feasibility Study - eng.modern-academy.edu.egeng.modern-academy.edu.eg/e-learning/comm/project manegement/Ap… · •The conclusions of the feasibility study should ... Technical

1

App.1

Feasibility Study

2/25/2018

Introduction

Types of Feasibility

Steps of Feasibility Study

An Example

2

Introduction

2/25/2018

3

What is Feasibility Study:

• A feasibility study or assessment is an analysis of the viability of an idea.

• It focuses on helping answer the essential question of:-

"should we proceed with the proposed project idea?"

• All activities of the study are directed toward helping answer this question.

2/25/2018

• During the feasibility process you may investigate a variety of ways of organizing the business and positioning your product in the marketplace.

• The conclusions of the feasibility study should outline in depth the various alternatives examined and the strengths and weaknesses of each.

• The study will help you assess the tradeoff between the risks and rewards of moving forward with the business project.

2/25/2018 4

• The feasibility study will be a major information source in making this decision.

• This indicates the importance of a properly developed feasibility study.

• The inputs of the feasibility study are: the proposed idea, the desired goals and the available capabilities (financial, technical, and managerial).

• The output of the feasibility study is: an advisory answer to proceed or not, but the final decision (yes or no) is left to the owners.

2/25/2018 5

Types of Feasibility

2/25/2018 6

1. Market Feasibility

• The market needs analysis to view the potential impacts of market demand, competitive activities, etc. and market share available.

• Possible competitive activities by competitors, whether local, regional, national or international, must also be analyzed for early contingency funding

2/25/2018 7

2. Technical Feasibility

• This area reviews the engineering feasibility of the project, including :

– Structural, civil and other relevant engineering aspects necessitated by the project design.

– Technical capabilities of the personnel as well as various technologies to be used in the project.

– In some instances, as in third world countries, technology transfer and training have to be analyzed as well as infrastructure support and other issues.

2/25/2018 8

3. Managerial Feasibility

• The are key elements required to ascertain managerial feasibility include:

– Well suited organizational structure to the type of the undertaken Project.

– Demonstrated management capability and availability

– Employee involvement and commitment

2/25/2018 9

4. Economic Feasibility

• This involves the feasibility of the proposed project to generate economic benefits.

• A benefit-cost analysis, and a breakeven analysis are required aspects of evaluating the economic feasibility of a project.

• The tangible and intangible outcomes of a project should be translated into economic terms for consistent basis of evaluation.

• Even when a project is non-profit in nature, economic feasibility is critical.

2/25/2018 10

5. Financial Feasibility

• Financial feasibility involves the capability of the project organization to raise the appropriate funds needed to implement the proposed project.

• In many instances, project proponents choose to have additional investors or other sources of funds, including loans, for their projects.

• In these cases, the feasibility, soundness, sources and applications of these project funds can be an obstacle.

2/25/2018 11

6. Position Feasibility

• The location of the production facility should close to the raw materials sources, market, and labors.

• In the same time the price of the land should be cheap.

2/25/2018 12

7. Cultural Feasibility

• Cultural feasibility deals with the compatibility of the proposed project with the cultural environment of the project.

• In labor-intensive projects, planned activities must be integrated with the local cultural practices and beliefs.

• For example, religious beliefs may influence what an individual is willing to do or not do.

2/25/2018 13

8. Social Feasibility

• Social feasibility addresses the influences that a proposed project may have on the social system in the project environment.

• The ambient social structure may be such that certain categories of workers may be in short supply or nonexistent.

• The effect of the project on the social status of the project participants must be assessed to ensure compatibility.

2/25/2018 14

9. Safety Feasibility

• Safety feasibility refers to an analysis of whether the project is capable of being implemented and operated safely with minimal adverse effects on the environment.

• Unfortunately, environmental impact assessment is often not adequately addressed in complex projects.

2/25/2018 15

10. Political Feasibility

• Political considerations often dictate directions for a proposed project.

• This is particularly true for large projects with significant visibility that may have significant government inputs and political implications.

• Political feasibility analysis requires an evaluation of the compatibility of project goals with the prevailing goals of the political system.

2/25/2018 16

11. Environmental Feasibility

• This is an aspect worthy of real attention in the very early stages of a project.

• Concern must be shown and action must be taken to address any and all environmental concerns raised or anticipated.

• This component also addresses the ability of the project to timely obtain and at a reasonable cost, needed permits, licenses and approvals.

2/25/2018 17

Steps of Feasibility Study###

2/25/2018 18

2/25/2018 19

As a conventional way of writing the feasibility study, it is categorized and arranged in four sections as shown below:

1. Market Study

• The market study should cover the following items:

– Demand of the market (local and international) → The target Volume of the produced items.

– Specification, quality, and market price of the required items → The target Specification, quality, and price of the produced items.

– The market sales systems and regulations → The target sale policy.

2/25/2018 20

• Remember: The target specification and quality of the produced items should be matched with the owners' capabilities (financial, technical, and organizational).

2/25/2018 21

2. Technical and organizational Study

• The technical study should cover the following items:

– Layout of the production facility

– Production lines and equipments

– procurement plans.

– Operation plans.

– Labor availability and Skills

– Technology transfer and training .

2/25/2018 22

3. Financial and Economical Study

• The Financial and Economical Study should cover the following items:

– Budged estimate, and cash flow rate.

– Final product price.

– Cost-Benefit analysis of the project.

– Payback period of the project.

2/25/2018 23

4. Environmental Study

• The Environmental Study should cover the following items:

– The bad impact of the proposed project on the environment should be eliminated or at least minimized.

– The safety of the working personnel should be considered.

– The working opportunities which are created and offered to the society are considered as benefit of the project.

2/25/2018 24

An Example www.ProjectManagementDocs.com

2/25/2018 25