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Feasibility Analysis for a Software Project

Feasibility Analysis for a Software Project. Dr. Pedro Mejia Alvarez Seccion de Computacion, CINVESTAV-IPN. Feasibility Analysis. “A measure of how beneficial or practical the development of a software system will be to an organization. This analysis recurs throughout the life cycle.”.

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Feasibility Analysis for a Software Project

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  1. Feasibility Analysis for a Software Project Dr. Pedro Mejia Alvarez Seccion de Computacion, CINVESTAV-IPN

  2. Feasibility Analysis “A measure of how beneficial or practical the development of a software system will be to an organization. This analysis recurs throughout the life cycle.”

  3. Planning Planned Project Existing System Support Analysis Production System Business Requirements Implementation Design Technical Design Feasibility Checkpoints “creeping commitment approach”

  4. Planning Planned Project Existing System Support Analysis Production System Business Requirements Implementation Design Technical Design Feasibility Checkpoints • systems analysis -- study • urgency? rough cost estimate • systems analysis -- definition • clearer scope, refined cost estimate • systems design -- selection • adjust scope, schedule, costs • systems design -- procurement • option check before letting contracts • systems design -- detail design • one last chance to cancel or downsize

  5. Planning Planned Project Existing System Support Analysis Production System Business Requirements Implementation Design Technical Design Feasibility Analysis • Technical • can system be developed? • Operational • can organization absorb the change? • Economic • what is business justification? • Schedule • can system be implemented in time available?

  6. People Technical Feasibility Technology • Is the technology or solution practical? • Do we currently possess the necessary technology? • Do we possess the necessary technical expertise?

  7. People Operational Feasibility • Is the problem worth solving? • Will the solution to the problem work? • How do the end-users and managers feel about the problem (or solution)?

  8. People Schedule Feasibility • Can the project deadlines be met? • What will it cost to accelerate development?

  9. Economic Analysis • Cost estimates • acquisition or development costs • operation and maintenance costs • Benefit estimates • tangible benefits • intangible benefits

  10. Estimating Costs • acquisition or development (one time) • operation and support (ongoing) • in these expense categories • personnel hours • computer usage • media and supplies • equipment and software

  11. Estimating Acquisition Cost • Shop the Vendors (informal) • Request for Proposal (RFP) • Request for Quote (RFQ)

  12. Estimating Development Cost • break project up into tasks • estimate SDLC tasks independently • use life cycle cost model • e.g., 1-3-3-3 model • take advantage of analogy/experience • how much have similar projects cost? • calculate function point metric • estimate “size” of project from inputs, outputs, etc. • apply productivity rate

  13. Estimating Operation and Support • client/user personnel • technical personnel • media and supplies • equipment and software support • repair • enhancement

  14. Estimating Tangible Benefits • reduced costs • manual operations • computer operations • programmed decisions • increased revenue • new services • differentiated product • faster delivery • better quality • larger market share

  15. Estimating Intangible Benefits • information quality • precision • timeliness • integration • presentation • job satisfaction • participative design • job enrichment • improved tools • external standing • responsiveness • corporate image

  16. Economic Analysis (continued) • traditional capital planning techniques apply • payback analysis • return on investment • net present value

  17. January 1996 Payback Analysis • determines how long it will take for accrued benefits to overtake accrued and continuing costs • most companies want quick payback • 3-5 years is typical

  18. % Return on Investment (ROI) • determines the lifetime profitability of different investments • ROI = (benefits - costs) / costs) • Annual ROI is common measure

  19. Net Present Value (NPV) • determines the lifetime profitability of different investments • NPV = discounted benefits - discounted costs • Preferred technique in many organizations

  20. Feasibility Matrix

  21. Benefit Profile Chart(for documenting intangibles)

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