FEASIBILITY STUDIES

Aditya Dalal
Abhilash Agrawal Siddhant Jain
Bhushan Ostwal Shrikant Parsewar
Vipul Topare -

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IS THIS FOX PLAYING TRICKS

ON YOU?
HE IS NOT ALONE

CAN YOU SEE WHAT

HAUNTING THIS
FOX?

CONTENTS
Introduction
Overview of the study
Elements of feasibility analysis
Feasibility report
Types of feasibilities
Tangible and intangible benefits
Conclusion

INTRODUCTION
Feasibility analysis/studies is used
to access strengths and weaknesses
of proposed project and present
direction of activities which will
improve the project and achieve
desired results.
It is an evaluation and analysis of
the potential of the proposed project
which is based on extensive
investigation and research to give
full comfort to the decisions makers.

BEFORE YOU BEGIN WE SHOULD THINK ABOUT

THE FOLLOWING QUESTIONS

What defined market am I trying to reach?

What specific companies/organizations are servicing this market?

Are they successful?

Something similar?
What is their market share?

Is the market saturated or wide open?

QUESTIONS CONTINUED..

What is the size of the market?

How can you reach this market?

Is it growing?
Is it stable, volatile, trendy?
How are competitors currently reaching the market?

What do customers expect from this type of product

or service?

QUESTIONS CONTINUED..

What are the business models of competitors?

What core competencies must the product or service have?

What are customers willing to pay for this service or product?

What is your competitive advantage?

FEASIBILITY STUDY
is an analysis of the viability of an idea.
focuses on helping answer the essential question
should we proceed with the proposed project idea?

All activities of the study are directed toward

helping answer this question.

A FEASIBILITY STUDY
Is a preliminary study undertaken before the real work of a project
starts to ascertain the likelihood of the project's success.
Is an analysis of all possible solutions to a problem and a
recommendation on the best solution to use.
Involves evaluating how the solution will fit into the corporation.
Can decide whether an order processing be carried out by a new
system more efficiently than the previous one.
Could be used to test a new working system, which could be used
because:

WHY FEASIBILITY STUDY?

Feasibility studies address things like where and how the business
will operate.
They provide in-depth details about the business to determine if
and how it can succeed, and
serve as a valuable tool for developing a winning business plan.
Feasibility studies can be used in many ways but primarily focus
on proposed business ventures.
Anybody with a business idea should conduct a feasibility study..
to determine the viability of their idea before proceeding with the
development of a business.

DETERMINING EARLY THAT A BUSINESS

IDEA WILL NOT WORK SAVES
Time
Money
Heartache

A FEASIBLE VENTURE IS ONE

WHERE THE BUSINESS WILL
generate adequate cash-flow and profits
withstand the risks it will encounter
remain viable in the long-term and
meet the goals of the founders.

AN OVERVIEW OF THE STUDY

Appraisal of existing systems and manual processes
Troubleshooting
Process re-engineering
Risk analysis and assessment
Risk management
Cost benefit analysis
Impact analysis
Integration of existing and new systems
Resources requirements planning and timings
Implementation strategy
Infrastructure assessment and requirements
Dependencies and requirements

THE ELEMENTS OF FEASIBILITY ANALYSIS

FOR A PROJECT SHOULD BE COVERIN THE
FOLLOWING :

1.
2.
3.
4.
5.
6.
7.

NEED ANALYSIS
PROCESS WORK
ENGINEERING AND DESIGN
COST ESTIMATE
FINANCIAL ANALYSIS
PROJECT IMPACTS
CONCLUSIONS AND RECOMMENDATIONS

A FEASIBILITY REPORT SHOULD HAVE

THE FOLLOWING STRUCTURE:
1. Executive Summary:

It provides a quick overview of the man points of the assessment, helping

to form a picture of the proposal along with the recommendations.
It should be concise and include the major findings covered in the main
body of the report

2. Need Analysis:

Need Analysis information provide a context to the business proportion.

It analyzes the justification of the idea, with a study of the possible
alternatives.
It links the business idea to the current circumstances and helps to inform
evaluation of the business idea.

3. Engineering:
Description of the technical aspects of the business idea,
including any changes needed to be made to existing processes
or the need to add items to existing range of products and
services.

4. Cost Estimate:
The involves estimating project cost to a suitable
level of accuracy.
Levels of around -5% to +15% are common at this level of a project
plan.
Estimates of capital investment, recurring and nonrecurring costs
must be there.
Sensitivity analysis can be carried out on the estimated cost
values to see how sensitive the project plan is to the estimated cost
values.

5. Financial Analysis:
This involves an analysis of the cast flow profile of
the project
The analysis should consider rates of return, inflation, sources of
capital, payback periods, breakeven point, residual values, and
sensitivity.
This is a critical analysis since it determines whether or not and when
funds will be available to the project.

6. Project Impacts:
This portion of the feasibility study provides
assessment of the impact of the proposed project

an

Environmental, social, cultural, political, and economic impacts may be some

7. CONCLUSIONS AND RECOMMENDATIONS:

The feasibility study should end with the overall

outcome pf the project
This may indicate an endorsement or disapproval of the project.
Recommendations on what should be done should be included in
this section of the feasibility report.

A feasibilty study is a management-oriented activity.

After a feasibility study, management makes a go/no-go
decision. It helps examine the problem in the context of
broader business strategy.

TYPES OF FEASIBILITY
1. Technical
feasibility
2. Economic
feasibility
3. Schedule
feasibility
4. Managerial
feasibility
5. Financial feasibility

6. Cultural feasibility
7. Social feasibility
8. Safety feasibility
9. Political feasibility
10. Environmental
feasibility
11. Market feasibility

TECHNICAL FEASIBILITY
1. Reviews the engineering feasibility of the project including
structural and civil aspects
2. Assesses the details of how one deliver a project or services
ex. Materials, labour, transportation, location of the project
and technology
needed etc.
3. When projects are in third world countries, technology transfer
between geographical areas and cultural needs to be analysed
to understand overall loss or gain.
4. To get approval from concerned institution for license.
5. Example of calculating material requirements
List the material need to produce a service
From where will get those materials

ECONOMIC
FEASIBILITY
1. Analysis of the projects costs and
revenues in an effort to determine
whether or not it is logical and possible to
complete
2. Cost-benefit analysis is important. It is
systematic approach to estimating the
strengths and weaknesses of alternatives
that satisfy transactions, functional
requirements for business.
3. Provide the best approach for adoption
and practice in terms of labor, time and
cost savings etc
4. The tangible and intangible aspects of
the project should be translated into

SCHEDULE FEASIBILITY
1. How long will it take to get the technical expertise?
may need to hire new skilled experts
Or retrain existing systems staff
Whether hiring or retraining, it will impact the schedule
2. Assess the schedule risk
Given our expertise, are the project deadlines reasonable?
If there are specific deadlines, are they mandatory or desirable?
if they are not mandatory, the analyst can propose several
alternative schedules.
What if the project overruns?
3. Schedule feasibility includes:
Project estimation
Gantt and PERT charts

FINANCIAL FEASIBILITY
1. Financial feasibility should be
distinguished from economic feasibility
and usually done during project planning
process
2. It indicates under certain assumptions
how the project will work in terms of
technology, market conditions and
financial aspects.
3. It involves the capability of the project
organisation to raise appropriate fund
needed to implement the proposed
project.
4. Project proponents choose to have
investors, or other sources of funds for
their project. In these cases, the
feasibility, soundness, application of

CULTURAL FEASIBILITY
Culturalfeasibilitydealswiththecompatibility of the proposed
project with the culturalenvironmentof theproject.
In labor intensive projects , planned functions must be integrated
with local cultural practices and beliefs .
Ex-religious beliefs may influence what an individual is willing to or
not to do.

SOCIAL FEASIBILITY
Addresses influences of project on social system in project environment.
It determines weather the proposed project will be satisfactory for
the people or not.
Ex-projects which require labor man power will not work in high
class educated society.

SAFETY FEASIBILITY
important aspect Considered in Project Planning
Safety feasibility refers to an analysis of whether the project is capable of
being implemented and operated safely ,with minimal adverse effect on
environment.
Ex-If a factory due its high level of pollution going to affect surroundings ,
its agreement can be canceled .

POLITICAL FEASIBILITY
Referred - Politically Correct Proj."
Political considerations often dictate
direction for a proposed project.
Political feasibility analysis requires an evaluation of compatibility
of project goals with the prevailing goals of the political system.
Political feasibility is a measure of how well a solution to a policy
problem, will be accepted by a set of decision makers and the
general public.

ENVIRONMENTAL
FEASIBILITY
Environmental feasibility refers to a previous site analysis as far
as physical and environmental factors like location, flora, fauna,
climate, grounds and geology.
Action must be taken to address any &
all environmental concerns raised or anticipated.
ex-Mega Dams issues (Aswan Dam , Egypt)
Water logging - soil salinity increased deterioration of crops .

MARKET FEASIBILITY
Different than economic feasibility .
Market needs analysis to view:
a) Potential Impacts of Market

Demand

B) Competitive Activities
c) Divertible" Mkt Share -Available

TANGIBLE AND INTANGIBLE

BENEFITS
Tangible benefits for which money may be reasonably quantify and
measure

Intangible benefits that may be quantified in units other than

money or may be identified and described subjectively

TANGIBLE BENEFITS
Fewer processing errors
Increased throughput
Decreased response time
Elimination of job steps
Increased sales
Reduced credit losses
Reduced expenses

INTANGIBLE BENEFITS
Improved customer goodwill
Improved employee morale
Better service to community
Better decision making