Lesson 1, Topic 1
In Progress

Project Feasibility


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A feasibility study is a specific form of cost benefit analysis as discussed earlier, and helps to define

a project before its production and provide for configuration control over the end product. It helps to establish the nature and extent of the project, its viability and basic parameters, and involves a systematic and broad determination of the needs of the end user(s) of the project. There will be a need to evaluate whether the project is politically, environmentally or communally sensitive, and there is a need to establish whether it would be within the financial, resource and staffing constraints of an organisation.

Although in general terms, a feasibility study may be said to define a project before it is implemented, for the purposes of this module the following definition is offered:

A feasibility study may assess whether a proposed project is capable of a design solution which is practical, economically, socially, and environmentally viable in terms of the client group’s perceived need and restraints (sic) such as capital cost and future operational cost.

A feasibility study should not be regarded as a static document or one that remains relatively independent from the rest of the project procurement process and should be used as an on-going management tool throughout the project.

The general concept of feasibility and viability studies is slightly different.

  • A feasibility study for a venture generally seeks an answer to the question: Is it possible?
  • A viability study leads on from that position. If the venture is considered possible then a viability study seeks an answer to the question: Is it financially sound to proceed?

In practice these questions are rolled into an all-encompassing study, generically called the ‘feasibility study’. Projects will often require a series of studies, moving from the broad scope to more detailed considerations as the project scope is refined. Initial studies will obviously take a shorter time, and cost less.

In general, four types of study to be carried out prior to project approval, Opportunity studies, Pre- feasibility studies, Support or functional studies and Feasibility studies as illustrated in figure 2-6.

FIGURE 2-6: FOUR TYPES OF STUDY [PRE-INVESTMENT]

The opportunity study is usually carried out at the macro level due to the paucity of supporting data. Specific opportunity studies usually follow whereby a project idea is transformed into broad investment proposition for further testing if sufficient merit exists.

The pre-feasibility study is a screening operation that selects from the proposals under consideration, those that are worthy of continued analysis, and would normally address issues such as market studies, material inputs, location options, technology or process issues, manpower and overheads, project implementation and project financial analysis.

Support or functional studies are usually carried out to further knowledge of a particularly important or sensitive variable in the proposal appraisal process. Functional studies are not broad in their application and hence not frequently carried out. This is the commencement of risk management or loss control consideration for the appraisal process.