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Project_Management_Lecture_3

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8 views20 pages

Project_Management_Lecture_3

Uploaded by

Hemel Barua Udoy
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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Project Feasibility Study

Md. Thasinul Abedin


MBA(Accounting); MSc (Economics and Finance)
Assistant Professor of Accounting and Finance
University of Chittagong

February 13, 2025

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Why Project Feasibility Study?
▶ A project feasibility study is intended to
analyze and determine whether a particular
project can be completed under the various
pertinent aspects including but not limited to
social, economic, financial, legal, and technical
studies.
▶ Before commencing any project, the project
team must assess the possibilities of
completing the project and whether it is
worthwhile to employ resources relative to
other revenue generating ideas.

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50% Projects Fail-Why??

▶ According to a PMI research survey, it is


observed that more than 50% of projects are
not successful.
Failure does not mean that the project won’t get
delivered in terms of its commitments/intended
results. Rather it means that the participating
organization may not find it useful at least
immediately after the completion of the project
and could have preferred to another better
alternative.

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A Way to Mitigate Project Failure
▶ A thorough (rigorous) project feasibility study
is the first step towards avoiding the project
failure.
▶ Many projects subject to investments of
millions of dollars. Failures of them bring
huge liabilities for the organization and
sometimes can be disastrous especially once
they are mega-projects.
▶ The sooner the identification of project
failure, the faster it is to stop the project to
save resources.
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What is Project Feasibility Study?

A critical evaluation of the proposed idea to


understand challenges, hurdles, and difficulties to
execute the idea in order to ensure its viability
(ability to work successfully).

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Steps in Project Feasibility Study

▶ Market Feasibility Analysis


▶ Technical Feasibility Analysis
▶ Financial Feasibility Analysis
▶ Economic Feasibility Analysis
▶ Ecological Analysis
▶ Legal and Administrative Analysis
▶ Human Resource Feasibility Analysis

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Market Feasibility Analysis [1]

It is primarily concerned with the aggregate


demand of the proposed product/service in the
future and the market share expected to be
captured. The success of the proposed project
depends on the support to be received from the
customers.

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Market Feasibility Analysis [2]
Market feasibility analysis involves detailed
analysis and understanding of following things:
▶ Consumption trends and alternatives in the
market
▶ Existing suppliers and their capacities and
plans
▶ Constraints of production
▶ Patterns of variation in demands across
different time periods/ seasons
▶ Demand elasticity
▶ Behaviors, intentions, attitudes, requirements,
and preferences of customers
▶ Competition in the market
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Market Feasibility Analysis [3]

▶ Cost structures of the products being offered


▶ Administrative, legal, and technical
constraints involved in marketing the product

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Technical Feasibility Analysis [1]

▶ It deals with the technical aspects of the


project which are specific to the domain or
discipline involved.
▶ It is categorized into input analysis,
throughput analysis, and output analysis.

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Technical Feasibility Analysis [2]

Input Analysis: Concerns with the


identification, quantification, and evaluation of
project inputs such as skilled manpower,
machinery, and raw materials. It is very important
to know what and how much is required. Also, it
needs to be ensured that the right and quality
inputs are available at the right time.

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Technical Feasibility Analysis [3]

Throughput Analysis: Involves various


operations that need to be performed on the inputs
to add value. The inputs need to be transformed
through several stages of manufacturing to reach
into the final stage. From a technical feasibility
perspective, the project team needs to have a
thorough understanding of how to transform the
inputs.

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Technical Feasibility Analysis [4]

Output Analysis: refers to the product


specifications in terms of physical features such as
the geometry of the product, functional features,
chemical properties as well as compliance to global
standards.

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Financial Feasibility Analysis [1]

▶ The objective of financial analysis is to assess


whether the proposed project will be
financially viable in terms of the ability to
repay the debt and satisfy the return
expectations of those who provided the
capital.
▶ It is the key in project feasibility study
because the institution providing capital will
be more interested in looking at financial
feasibility than anything else.

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Financial Feasibility Analysis [2]

Financial feasibility analysis involves the


assessment of the following things:
▶ Cost of the total project and cost associted
with each stage in project life cycle.
▶ Means of financing the project.
▶ Projected profitability.
▶ Capital budgeting decision with the project.

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Economic Feasibility Analysis

▶ It is the study of costs and benefits.The main


purpose is to know whether the costs of the
product is justifiable in comparison to the
price at which it will be sold.
▶ Economic analysis simply deals with all the
costs associated with the product and
compares it with the budgeted selling price of
the product.

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Ecological Analysis [1]

▶ Some projects may cause a severe impact on


the environment either during the execution of
the project or the lifetime due to the resulting
product or service.
▶ Bulk drugs, chemicals, and petroleum
industries pollute the environment.
▶ Hence this kind of projects need prior
clearances from several different government
agencies that may reject the proposal or
accept with special conditions.

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Ecological Analysis [2]

A thorough ecological analysis seeks to answer the


following questions:
▶ What is the likely damage caused to the
environment?
▶ What are the costs associated with restoration
measures to encounter the damage?

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Legal and Administrative Issues

▶ There are several legal and administrative


issues related to land use, pollution control,
factory rules, safety, and labor in any project.
▶ These issues include taking registration, and
clearance and approvals from diverse
authorities.

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Human Resource Feasibility Analysis

A project is always executed by the human


resource. Hence the availability of the right kind
and amount of skilled manpower is critical for the
project to be executed without any bottlenecks.

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