Feasibility Study 31s4i

FEASIBILITY STUDY

This study is concerned with the first four phase of capital budgeting, viz, planning, analysis, selection and financing and involve market, technical, financial, economical and ecological analysis. A feasibility study is an evaluation of a proposal designed to determine the difficulty in carrying out a designated task. Generally, a feasibility study precedes technical development and project implementation

Generation of Ideas Initial Screening Is the idea prima Facie Promising No

Yes

Plan feasibility study

Conduct Market Analysis

Terminate

Conduct Technical Analysis

Conduct Financial Analysis Conduct Economic & Ecological Analysis Is the Project Worthwhile Yes

Prepare Funding Proposal

No

Terminate

Key factor • A key factor in any feasibility study must be ensuring that you are dealing with correct facts, correct assumption, and up to date financial data.

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Preliminary investigation • When complex problems or opportunities are to be defined, it is generally desirable to conduct a preliminary investigation called a feasibility study. • The primary objectives of the feasibility study is to assess three types of feasibility 6

Types of feasibility Study 1. Technical feasibility can a solution be ed with the existing technology or not? 2. Economic feasibility is the existing technology cost effective? 3. Operational feasibility Will the solution work in the organization if implemented? 7

The Components of a Feasibility Study 1.Description of the Business: The product or services to be offered and how they will be delivered. 2.Market Feasibility: Includes a description of the industry, current market, anticipated future market potential, competition, sales projections, potential buyers, etc. 3.Technical Feasibility: Details how you will deliver a product or service (i.e., materials, labor, transportation, where your business will be located, technology needed, etc.). 8

continue 4. Financial Feasibility: Projects how much start-up capital is needed, sources of capital, returns on investment, etc. 5. Organizational Feasibility: Defines the legal and corporate structure of the business (may also include professional background information about the founders and what skills they can contribute to the business). 6. Conclusions: Discusses how the business can succeed. Be realistic and honest. 9

Feasibility Study • A Feasibility Study is the analysis of a problem to determine if it can be solved effectively. • The results determine whether the solution should be implemented. • This activity takes place during the project initiation phase and is made before significant expenses are engaged. 10

Feasibility includes 1. 2. 3. 4. 5. 6. 7. 8. 9.

Project name Problem or opportunity definition Project description Expected benefit Consequence of rejection Resource requirements alternatives Other consideration Theorization

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Five common factors (TELOS) 1. Technology and system feasibility 2. Economic feasibility 3. Legal feasibility 4. Operational feasibility 5. Schedule feasibility

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1. Technology and system feasibility • The assessment is based on an outline design of system requirements in of Input, Processes, Output, Fields, Programs, and Procedures. • This can be quantified in of volumes of data, trends, frequency of updating, etc..

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2. Economic feasibility • Economic analysis is the most frequently used method for evaluating the effectiveness of a new system. More commonly known as cost/benefit analysis, the procedure is to determine the benefits and savings that are expected from a candidate system and compare them with costs.

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3. Legal feasibility • Determines whether the proposed system conflicts with legal requirements, e.g. a data processing system must comply with the local Data Protection Acts.

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4. Operational feasibility It is a measure of how well a proposed system solves the problems, and takes advantages of the opportunities identified during scope definition and how it satisfies the requirements identified in the requirements analysis phase of system development. 16

5.schedule feasibility • Schedule feasibility is a measure of how reasonable the project timetable is. Given our technical expertise, are the project deadlines reasonable?

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1. Executive Summary The executive summary provides an overview of the content contained in the feasibility study document. 2. Description of Products and Services This section of the feasibility study provides a high level description of the products and/or services which are being considered as past of the feasibility study 3. Technology Considerations This section of the feasibility study should explain any considerations the organization must make with regards to technology. Many new initiatives rely on technology to manage or monitor various business functions. New technology may be developed internally or contracted

4. Product/Service Marketplace

This part of the feasibility study describes the existing marketplace for the products and/or services the organization is considering. It may describe who the target market consists of for these products or services, who the competitors are, how products will be distributed, and why customers might choose to buy our products/services.

5. Marketing Strategy

Here the feasibility study provides a high level description of how the organization will market its product or service. Some topics which should be included are: how does an organization differentiate itself from its competitors; types of marketing the

6.Organization and Staffing With many new products or services there may be a need for additional staffing or for an organization to restructure in order to accommodate the change. 7. Schedule This section of the feasibility study is intended to provide a high level framework for implementation of the product or service being considered 8. Financial Projections The financial projections for the feasibility study provides a description of the financial projections

9. Findings and Recommendations This section of the feasibility study template provides an area where to summarize the findings of the feasibility study and explain why this course of action is or is not recommended. This section may include a description of pros and cons for the initiative being considered.