Feasibility Study

1. Feasibility Study • Definition: - - A feasibility study is an evaluation or analysis of the potential impact of a proposed project. - A feasibility study is an evalution of a proposal designed to determine the difficulty in carrying out a designated task. - A feasibility study precedes technical development and project implementation. 1

2. Need of Feasibility Study:- - It makes an analysis of all external and internal factors of a business. It emphasizes on three parameters:- cost, resources and functionality of system. - It analyzes the cost benefit approach. It takes into account all the costs of the projects and compares with all the benefits related to it. - It analyzes the strengths and also measures the weaknesses. Therefore user will have a fair idea about the project after considering the feasibility study. 2

3. Types of feasibility study 1) Technical Feasibility - The assessment is based on an outline design of system requirements in terms of Input, Processes, Output, Fields, Programs, and Procedures. - Technical feasibility is carried out to determine whether the company has the capability, in terms of software, hardware, personnel and expertise, to handle the completion of the project 3

4. 2) Economical Feasibility :- • Economic analysis is the most frequently used method for evaluating the effectiveness of a new system. It considers the cost/benefit analysis of the proposed project. The benefit is always expected to be overweighing the costs. • Cost-based study: It is important to identify cost and benefit factors, which can be categorized as Development costs and Operating costs. This is an analysis of the costs to be incurred in the system and the benefits derivable out of the system. • Time-based study: This is an analysis of the time required to achieve a return on investments. The benefits derived from the system. 4

5. 3) Operational feasibility :- It considers the acceptability of the system. Operational feasibility is a measure of how well a proposed system solves the problems, and takes advantage of the opportunities identified during scope definition i) It checks whether system will be used if it is developed and implemented. ii) Are the users of the system able to handle the system. iii) Whether the proposed system cause any trouble. 5

6. 4) Legal feasibility :- Determines whether the proposed system conflicts with legal requirements, e.g. a data processing system must comply with the local Data Protection Acts. 5) Schedule feasibility :- Schedule feasibility is a measure of how reasonable the project timetable is. Given our technical expertise, are the project deadlines reasonable? Some projects are initiated with specific deadlines. You need to determine whether the deadlines are mandatory or desirable. 6

7. Steps in feasibility study: - feasibility study should focus on the proposed plan of action and provide a detailed estimate of its costs and benefits 1) Determine if you actually need to conduct a feasibility study. 2) Create an outline for your feasibility study. 3) Describe your products and/or services. 4) Describe the technology that will be used by your company. 5) Describe your market environment. 6) Describe your competition. 7) Define your industry. 8) Draft your business model. 9) Describe your marketing and sales strategy. 7

8. 10) Describe both your production requirements and your operating requirements. 11) Describe the management & personnel of your business. 12) Describe the intellectual property that your company will develop and utilize. 13) Describe the regulations and environmental issues that your company will need to address 14) Describe critical risk factors, like economic stability and forecasts, investments, internal organization of the company, etc. 15) Outline your start-up schedule. 16) Provide documentation for your financial projections. 17) Describe your capital requirements and your strategy. 18) Outline your final findings and recommendations. 19) Draft your executive summary to reflect what will be included in the feasibility study. 8