Business Planning and Project Management: Faculty Name: Ms. Supriya Kamale

BUSINESS PLANNING AND PROJECT
MANAGEMENT
Faculty Name : Ms. Supriya Kamale

Unit No:3
Project Feasibility Analysis

Meaning of Project Feasibility
Feasibility study- • is an analysis of the viability of an idea.
is an analysis of all possible solutions to a problem and a recommendation on the best
solution to use.
is a formal study to decide what type of system can be developed, which best the
needs of the organization.
A feasibility study is essentially a process for determining the viability of a proposed

initiative or service and providing a framework and direction for its development and
delivery.
It evaluates project’s potential for success.
3 Project feasibility analysis

Why Do Project Feasibility Study
 To find a solution that is cost effective from a business perspective.
 To Find a solution that is well recognized
 To find out the probable market for the products
 To find out the opportunities and threats as presented by environment
 To determine the probable income of operating the project
 To show the contributions the project can offer to the society

Scope of Project Feasibility
The elements of a feasibility analysis for a project should cover the following:
1.Need Analysis:
The need may affect the organization itself, another organization, the public, or the
government. A preliminary study is then conducted to confirm and evaluate the need.
Is the need significant enough to justify the proposed project?
Will the need still exist by the time the project is completed?
What are the alternate means of satisfying the need?
2. Process Work:
Preliminary analysis done to determine what will be required to satisfy the need.
This can be performed by consultant who is an expert in the project field.

3. Engineering and Design:

This involves detailed technical study of the proposed project.
Technology capabilities are evaluated.
Product design if needed should be done.
4. Cost Estimate:
This involves estimating project cost .
Initial and operating costs are included in the estimation.
Estimates of capital investment and recurring/non recurring cost .
5. Financial Analysis:
This involves an analysis of the cash flow, rate of return, payback periods, sources of
capital, breakeven point.

6. Project Impacts:
The study provides an assessment of the impact of the proposed project.
Environmental, social, cultural, political and economic impacts these are he factors that
will determine how the project is perceived by the public.
7. Conclusions and Recommendations:

This should conclude with overall outcome of the project analysis. Recommendations
on what should be done / included are mentioned.

Types of Project Feasibility
1. Financial Feasibility :
The data required for financial feasibility analysis can be grouped as under:
 Cost of Project: The major cost elements of a project are the following
Land and site development
Building, plant and machinery,
Transportation, Miscellaneous assets,
Preliminary expenses, working capital margin, Initial cash losses.
 Means of financing :
Means by which a budget deficit is financed or a surplus is used.
Following are the sources of finance:
Share capital, Retained earnings, Subsidies,
Long term borrowing (financial institutions, banks)
Venture capital financing

 Cost of Production and Profitability:

Assessment of the earning capacity of the project.
It is a measure of project operational efficiency in terms of financial benefits
 Cash flow estimates :
These cash flows can be segmented as follows:
1. Initial Investment Outlay These are the costs that are needed to start the project,
such as new equipment, installation, etc.
2. Operating Cash Flow over a Project's Life.
3. Terminal-Year Cash Flow This is the final cash flow, both the inflows and outflows,
at the end of the project's life; For example, potential salvage value at the end of a
machine's life.
 Balance Sheets and Revenue statement:

2. Technical Feasibility :
•The technical analysis of a project idea can be scrutinized in detail to evaluate its
technical feasibility.
•Technical feasibility is one of the first studies that must be conducted after a project
has been identified.
•In large engineering projects consulting agencies that have large staffs of engineers
and technicians conduct technical studies dealing with the projects.
•To facilitate the most optimal formulation of the project in terms of technology, size,
location and so on.

2. Technical Feasibility : The project needs to be examined with reference to the

following points:
Location :
1.The success of a project depends on its proper location.
2.The accessibility to, & availability of, raw material sources.
3.The availability of cheap or moderately priced utilities such as power, water or fuel.
4.The combine cost of transporting raw materials & fuel to the site.
5.The availability of skilled & unskilled labour.
Land and Building:
1.The land should be sufficient to take care of future expansions.
2.If it is on lease, terms and conditions to be verified.
3.Layout should be depicted through diagrams.
4.Minimum material handling, smooth work flow

 Plant and Machinery:

1. What type of equipment and technology will the business need to produce its
product/service?
2. What costs are involved to purchase and set up the equipment?
3. EQUIPMENT SUPPLIERS: Who are the potential suppliers of the equipment?
Where are they located? What sort of service and warranties do they provide? How
long will it take to acquire the equipment and begin operations
 Technical Competence:
1. Technology is a critical aspect of technical analysis of any project. So it must be
analysed effectively.
2. Technology’s Cost of acquisition, installation, repairs and maintenance should be
analysed properly.
3. A technology is considered appropriate only if it is assessed to be satisfactory and
relevant .

 Environmental Impact:
This study - identifies the environment in which a project is to be implemented,

assesses the short and long-term impacts.
1. surface water quality
2. air quality
3. geology
4. erosion
5. land quality
6. fisheries
7. forests
8. noise
9. archaeological/historical significance
10.public health

3. Economic Feasibility:
1.The economic feasibility deals with marketability of product, projection or

forecasting of demand.
2.To examine the sales promotion proposed by the enterprise and its adequacy.
3.Economical benefits are associated with ;
Historical information of similar projects
Future taxation and inflation estimates
Scale and scope of the project
Anticipation of other competing projects

4. Managerial Competence:
1.Success of business depends largely on the resourcefulness, competence and integrity

of management.
2.The experience and capability of the promoters to implement and run the project.
3.Competent team of specialists in the required discipline.
4.Organizational and managerial expertise in the implementation of the project.

5. Market Appraisal:
1.Examine the reasonableness of demand projections.
2.Assess the marketing infrastructure in terms of promotional effort, distribution
network, transport facilities, stock levels etc.
3.Judge the knowledge , experience of key marketing personnel
4.Export potential
5.Current and future market scenario / competition.
6.What is the market?
7.Who are the competitors?
8.Who is the target audience?
9.What do customers want?
10.What do competitors offer? 
11.What is your USP? 
12.What do customers think you offer them?

6. Environment Feasibility:
1.It is an upcoming important aspect of appraisal.

2.Necessary approvals to be obtained from environment ministry.
3.The ministry tries to minimize the damage to the environment by proposed project.
(e.g. Navi Mumbai Airport, Metro, Coastal)

Thank You

Business Planning and Project Management: Faculty Name: Ms. Supriya Kamale

Uploaded by

Copyright:

Available Formats

Business Planning and Project Management: Faculty Name: Ms. Supriya Kamale

Uploaded by

Document Information

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Business Planning and Project Management: Faculty Name: Ms. Supriya Kamale

Uploaded by

Copyright:

Available Formats

BUSINESS PLANNING AND PROJECT

Faculty Name : Ms. Supriya Kamale

Project Feasibility Analysis

Feasibility study- • is an analysis of the viability of an idea.

A feasibility study is essentially a process for determining the viability of a proposed

It evaluates project’s potential for success.

3 Project feasibility analysis

 To find a solution that is cost effective from a business perspective.

 To Find a solution that is well recognized

 To find out the probable market for the products

 To find out the opportunities and threats as presented by environment

 To determine the probable income of operating the project

 To show the contributions the project can offer to the society

4 Project feasibility analysis

5 Project feasibility analysis

3. Engineering and Design:

6 Project feasibility analysis

7. Conclusions and Recommendations:

7 Project feasibility analysis

8 Project feasibility analysis

 Cost of Production and Profitability:

9 Project feasibility analysis

10 Project feasibility analysis

2. Technical Feasibility : The project needs to be examined with reference to the

11 Project feasibility analysis

 Plant and Machinery:

12 Project feasibility analysis

This study - identifies the environment in which a project is to be implemented,

13 Project feasibility analysis

1.The economic feasibility deals with marketability of product, projection or

14 Project feasibility analysis

1.Success of business depends largely on the resourcefulness, competence and integrity

15 Project feasibility analysis

16 Project feasibility analysis

1.It is an upcoming important aspect of appraisal.

17 Project feasibility analysis

You might also like