Project Feasibility

“Project feasibility refers to the assessment of the practicality of a proposed project or system.”

Feasibility study aims to find objectively and rationally

1. Strengths and weaknesses of an existing business or proposed venture
2. Opportunities and threats present in the natural environment
3. Resources required to carry through
4. Prospects for success

Concisely, the two criteria to judge feasibility are – Cost required and Value to be attained

“TELOS” is an acronym in project management that is used to define the five areas of feasibility that determine whether a project should be functional or not.

T – Technical – Whether a project technically possible?

E – Economic – Whether the project be afforded? If yes, will it increase profit?

L – Legal – Whether the project is legal?

O – Operational – How will the current operations support the change?

S – Scheduling – Whether the project be completed in time?

Technical Feasibility

Technical feasibility is the assessment based on an outline design of system requirements, so as to determine whether the company has the technical expertise to handle the completion of the project.

Key features of a feasibility report

1. Brief description of the business to assess possible factors which could affect the process of examination
2. Part of the business being examined
3. Human and economic factor
4. Possible solutions to the problem

At this level, the primary concern is whether the proposal is both technically and legally feasible (where assuming moderate cost).

Technical feasibility assessment primarily focus on gaining an understanding of the present technical resources of the organization and its applicability to the expected needs of the proposed system. It is the valuation of the hardware and software and the process in which it meets the need of the proposed system.

Legal Feasibility

Legal feasibility determines whether the proposed system conflicts with legal requirements or not, for instance a data processing system must comply with the local data protection regulations and also to check whether the proposed venture is acceptable with reference to the laws of the land.

Operational Feasibility

Operational feasibility is defined as a measure of how well a proposed system solves the problems, and takes benefit of the opportunities identified during the scope definition and also how it meets the requirements identified in the requirements analysis phase of system development.

Operational feasibility assessment mainly focuses on the degree to which the proposed development project matches with the existing business environment and objectives with reference to development schedule, delivery date, corporate culture and existing business functions.

In order to ensure successful implementation, desired operational outcomes must be implemented during the design and development phase which includes design-dependent parameters such as reliability, maintainability, supportability, usability, producibility, disposability, sustainability, affordability and many more. Note, such parameters are required to be considered at the early stages of design in order to realize desired operational behaviours.

System design and development requires suitable and timely application of engineering and management efforts in order to meet the requirement of the previously mentioned parameters. System design serves its desired purpose most effectively when its technical and operating characteristics are implemented into the design. Operational feasibility is a crucial aspect of systems engineering which is an integral part of the early design phases.

Schedule Feasibility

It is said that a project fails if it takes too long to be completed before it becomes useful. That is to estimate the time duration a system will take to develop, and whether it can be completed in a given time period using methods like payback period etc.

Schedule feasibility is primarily a measure the rational of the project timetable. With the technical expertise, it is crucial to determine if the project deadliness are reasonable? It is important to note that some projects are initiated with specific deadlines and it is also necessary to determine whether the deadlines are mandatory or only desirable.

Financial Feasibility

For a new project, financial viability can be estimated based on the given parameters

1. Total estimated cost of the project
2. Project finance in terms of its capital structure, debt to equity ratio and promoter’s share of total cost
3. Existing investment by the promoter in any other business
4. Projected cash flow and profitability

Financial viability of a project must provide the following information,

1. Complete details of the assets to be financed and the liquidity structure if the assets.
2. Rate of conversion to cash-liquidity which means ease with which various assets can be converted to cash
3. Funding potential of the project and repayment terms

Factors to be considered to handle sensitivity in the repayments capability

1. Mild slowing of sales
2. Acute reduction/slowing of sales
3. Small increase in cost
4. Large increase in cost
5. Adverse economic conditions

Feasibility Study Method

The various methods used to conduct feasibility studies takes different forms, based on their contexts. It may take months or even years to conduct feasibility study in large enterprises, schools, and government agencies in conjunction with outside consultants. Where it may take only few days to conduct an ad hoc feasibility study for a small business with the right connections and resources. Irrespective of the duration involved, the project manager in charge of the feasibility study must remain neutral  to handle critical tasks.

The four critical tasks involved in conducting the feasibility study are,

1. Examine the Market

An effective feasibility study method involves a critical analysis of the competitive landscape for a product /service. Any otherway in which a customer allocates money, time, or attention can be viewed as competition. Therefore it is important for the feasibility study to give a real  picture of the likelihood that adequate customers or stakeholders will be satisfied to result in a sustainable offering.

2. Review Technical Requirements

It is very important to understand the needs of the marketplace but it does not always ensure to meet the customer’s expectations. Therefore reviewing the technical requirements in the feasibility study method compiles the overall essentials for a successful project into a proper context. Very often such a study helps to find out whether the project sponsor would require more internal resources or whether outsourcing the task to an outside vendor could handle the tasks more effectively.

3. Explore the Business Model

After assessing the current market need and the ability of the team to execute, a feasibility study helps to understand the long-term viability of the project. The feasibility study method is primarily based on tools like scenario planning so as assure long-term success. By exploring the business model, the Project managers can discover whether the business model actually offers enough benefits potential, so as to make the project executable and worth implementing.

4. Look for an Escape Route

Very often it is seen that the stakeholders prefer to know the profitability of the project and whether the desired results are achievable, so that they can have a strong idea and can check the same when needed.

SWOT

SWOT analysis an acronym for Strength, Weakness, Opportunity and Threat.  SWOT analysis is a method of evaluating the strengths, weaknesses, opportunities, and threats that affect the functionality of the project. SWOT analysis needs a comprehensive appraisal of internal and external situations before determining the suitable strategic options. Competitive strategies are built on the strengths of a company and by exploiting internal as well as external opportunities.

Strengths and Weaknesses

Strength refers to something that the company is good at doing. Some of the crucial strength that a company fancies are technical patents, engineering expertise, strong financial position, reputation for quality, and skilled workforce, etc. Where weaknesses are the areas in which the firm lacks or a condition that puts it at a lower end.

Analysis to identify weaknesses

1. Evaluation of each sub-unit of business
2. Evaluate status of tracking or control systems to identify the critical success indicators
3. Evaluating the company’s level of creativity, risk taking and competitive approach.
4. Evaluation of the resources available to implement plans.
5. Evaluation of the current organizational culture and of the company’s way of doing business.

Opportunities and Threats

Any organization must be able to evaluate the external environment to prepare for the upcoming challenges. A firm’s external world will have various opportunities and threats from the environment.

Assessment of external environment must include

1. Economic environment
2. Socio-political environment
3. Social environment
4. Technological environment
5. Competitive environment

The strategy to assess the opportunities and threats must match up with opportunities suited to the firm’s capabilities, defenses against external threats and changes to the external environment

SWOT analysis can be performed individually as well, but it can have improved objectivity by using a team. The most objective results can be achieved if the selection of stakeholders is from a range of expert and managerial levels staff. The varied range of experience and understanding provides a more realistic judgment of the strength or weakness, as well as gain a broader understanding of opportunities and threats.

As strengths, weaknesses, opportunities, and threats are identified, they are entered into the appropriate section of the matrix. If you have more than ten of anything, it is suggested to re-evaluate them. It is very important to be more critical of the organization’s true strengths and weaknesses. In the case of opportunities and threats, try to prioritize them by the impact they could have in terms of occurrence.

PEST

PEST is an acronym for Political, Economic, Social and Technological analysis that is used to describe a framework of macro-environmental factors used in the environmental scanning component of strategic management.

Four factors of PEST analysis

1. Political factors: Political factors are basically to what degree the government intervenes in the economy. Political factors include areas such as tax policy, labor law, environmental law, trade restrictions, tariffs, and political stability. It may also include goods and services which the government wants to provide or be provided and those that the government does not want to be provided known as merit and demerit goods respectively. Governments holds a great influence on the health, education, and infrastructure of a nation.
2. Economic factors: Economic factors include economic growth, interest rates, exchange rates and the inflation rate. These factors have major impacts on how businesses operate and make decisions. For instance, interest rates affect a firm’s cost of capital. Exchange rates impacts the costs of exporting goods and the supply and price of imported goods in an economy.
3. Social factors: Social factors include the cultural aspects and include health consciousness, population growth rate, age distribution, career attitudes and emphasis on safety. Trends in social factors affect the demand for a company’s products and how that company operates. For instance, an aging population may imply a smaller and less-willing workforce which leads to n increase in the cost of labor. Also, companies may change various management strategies to adapt to the upcoming social trends.
4. Technological factors: Technological factors include technological aspects such as R&D activity, automation, technology incentives and the rate of technological change. Technological factors can determine barriers to entry, minimum efficient production level and influence outsourcing decisions. Also, technological shifts can affect costs, quality, and lead to innovation.

While performing PEST analysis, one must look in the right place for changes that may impact the organization. So in case your organization has global operations, then you would be required to be specific about the market to be monitored. Any alterations made to a process as a result of your SWOT or PEST analyses may have potential negative consequences that you will need to account for. It is therefore important to establish and measure consequential metrics as it can help account for any negative consequences.

One  may establish a feature, other than the targeted feature for improvement, as a consequential metric. This indicates that any alterations as a result of the proposed solution being implemented are evaluated for possible negative impacts on this feature. They are things considered essential to the quality of the product. They are related to customer requirements. We measure the consequential metric by determining the negative impact that implementing the solution would have on the feature defined as a consequential metric. In others words, you determine how much harm would be done.

Demonstration

Demonstrations is the process to show how the proposed solution will improve the process. Generally, members of the Six Sigma team conduct the demonstration, that may or may not involve a functional example i.e., no standard method exists for conducting a demonstration.

During the time of demonstration, one can use a variety of techniques to explain solutions. For instance, while demonstrating a new engine, you might want to use reports with graphs to convey factual data, and also a 3D model to show the change. For a new manufacturing process, you could perform a walk-through, explaining the proposed changes as you go. A demonstration may include a simulation or could involve executing the improved process. The technique you choose will depend on your industry, purpose, and what will be the most effective.

Simulation

Simulation primarily copies the real-world application of the solution. Simulations are usually developed using a mathematical or computer-based model to illustrate the consequences if the proposed changes were implemented. Simulations is suitable where a pilot test or demonstration would be too costly, time consuming, dangerous, or simply not possible.

Pilot Test

Pilot Test is a small-scale trial, where a few examinees take the test and comment on the mechanics of the test. These examinees point out any problems with the test instructions, instances where items are not clear, and formatting and other typographical errors and/or issues. As we go about preparation for conducting a pilot test, certain best practices will help you get the most benefit out of the technique. The four best practices while conducting a pilot test are – prepare for the pilot test, remain objective, provide help when appropriate, and take good notes.

Proof of Concept

Proof of Concept (PoC) is a realization of a certain method or idea in order to demonstrate its feasibility, or a demonstration in principle with the aim of verifying that some concept or theory has practical potential. A proof of concept is usually small and may or may not be complete.

Some of the functions of PoC are,

1. Helps to identify a technical risk, such as the performance of a product or its ability to integrate with external systems.
2. Helps to examine different technology options for later selection such as choice of web server or database
3. Helps to demonstrate how the product might work with a view to informing UX, design and business decisions over its features.

Generally, the PoC is one to throw away that is built such that one can surely get something working quickly on your box to show that it can be done but it’s not actually going to be part of the finished product.

Advantages and Disadvantages of PoC

1. One can easily learn whether a task is achievable or not
2. One can easily learn whether a task is desirable or not
3. It is hard to justify that the task performed adds value as it is not going into production process
4. The PoC functioning can lead to a false illusion of progress for the demo given to the people, , even if it’s smoke and mirror.