MODULES IN BT

401
–
PROJECT
STUDY

ED CARLO G. RAMIS
DEPARTMENT OF ENGINEERING TECHNOLOGY
COLLEGE OF ENGINEERING
UNIVERSITY OF EASTERN PHILIPPINES
UNIVERSITY TOWN, NORTHERN SAMAR 6400
 OVERVIEW

This is an introduction to Project Stidy . This course discusses the

feasibility study, as the name suggests, is designed to reveal whether a
project/plan is feasible. It is an assessment of the practicality of a proposed
project/plan. is part of the initial design stage of any project/plan. It is
conducted in order to objectively uncover the strengths and weaknesses of
a proposed project or an existing business. It can help to identify and
assess the opportunities and threats present in the natural environment,
the resources required for the project, and the prospects for success

The subject is divided into six units namely:

 Project Summary
 Market Study
 Technical Study
 Management Study
 Financial Study
 Socio-Economic Study

These are your guides to use these Modules:

1. Read everything, the learning outcomes, from the objectives to the
last topics. The objectives will guide you as we go along with the
different topics.
2. Discussion of the topics (Please read and understand with all your
Heart).
3. Answer all activities after each topic. Be a superstar. The results
will be our basis for your grades.
4. References and other suggested readings will be provided.
5. Please feel free to ask you teacher for any clarifications.

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 MODULE 1.0

INTRODUCTION OF FEASIBILITY STUDY

INTRODUCTION:

The purpose of this chapter is to introduce the reader to feasibility

studies, project appraisal, and investment analysis. Feasibility studies are
an example of systems analysis. A system is a description of the
relationships between the inputs of labour, machinery, materials and
management procedures, both within an organization and between an
organization and the outside world. Similarly, buildings may be seen as
combinations of spaces and inputs inter- acting with each other and the
physical, social and economic environment. Systems analysis is a set of
techniques used to understand and improve methods of production. While
systems analysis is usually applied to existing organisations and methods
of production, feasibility studies are used to examine the practicality of
proposals. In economic terms, feasibility studies are simplifying models of
the real world, focusing attention on certain aspects of alternative
schemes.

Feasibility studies have several uses.The most obvious purpose is to

under- stand the cost implications ofa project. The client-developer needs
this information, as does the design team, in order to plan and design a
building or structure. Feasibility studies set budget limits and can be used
to monitor costs during construction. On completion, building users or
facilities man- agers can use feasibility studies to monitor running costs
and maintenance by comparing actual with expected figures. In theory,
feasibility studies can also be used to help designers, by providing
feedback on the costs and benefits of designs, components and materials.
Unfortunately, in practice, it is unusual for facilities managers or
designers to make full use of early project documenta- tion, even though
the figures and calculations in the documents may have been critical in
coming to a decision to build.

A secondary application of feasibility studies vital to architects and

developers is the use of the report to promote or defend suggested designs
and proposals. In one sense, it is a marketing device for designers and
developers. Apart from tender documents, the feasibility study can form

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the basis of a bid to carry out a project. Groups who wish to oppose
schemes can also make use of the techniques of feasibility study to
produce alternative solutions.

OBJECTIVES

At the end of the module you should be able to:

1. History, Scope of Feasibility Study.

2. Define the importance of constructing and conducting feasibility
study.
3. Understand the meaning and significance of feasibility study
4. Critique and analyze data in constructing and conducting a
feasibility study.

WHAT IS A FEASIBILITY STUDY

The term “feasibility study” is used principally by business and

project managers. Essentially, this type of study is an exercise which
documents each of the possible solutions to either a business problem or
an upcoming opportunity, and looks to identify which solution is the most
“feasible.” These types of studies take an in depth look at the resources
available—both material resources and human resources—and any
potential impediments that could prospectively hamper the project’s
desired outcome.

By using a feasibility study to examine the various solutions to a

problem or opportunity, project managers and team members hope to gain
some clarity with regard to possible outcomes. These professional employ
an assortment of assessment tools and methods in this process, with an
end goal of finding a consensus decision on which strategy to implement.

DEFINITION OF FEASIBILITY STUDY

Feasibility Study is a formal project document that shows results of

the analysis, research and evaluation of a proposed project and determines
if this project is technically feasible, cost-effective and profitable. The
primary goal of feasibility study is to assess and prove the economic and

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technical viability of the business idea. The outcome of the study will
determine if there is economic sense to take the project initiative and
proceed with the development of the implementation plan.

A project feasibility study helps investors identify and analyze all

the opportunities they can gain upon successful completion of the project.
If the document did not prove the economic viability, then the proposed
venture should not be pursued. A feasibility study allows avoiding
unfounded spending of effort, time and money, so it is a highly effective
tool of project investment evaluation and planning. It forces investors to
put their ideas on paper to conduct analysis and assessment and then find
out whether the ideas are worth investing or not.

aim to objectively and rationally uncover the strengths and

weaknesses of the existing business or proposed venture, opportunities
and threats as presented by the environment, the resources required to
carry through, and ultimately the prospects for success.
(Justis&Kreigsmann, 1979), (Georgakellos&Marcis, 2009). In its simplest
terms, the two criteria to judge feasibility are cost required and value to be
attained.[3] As such, a well-designed feasibility study should provide a
historical background of the business or project, description of the product
or service, accounting statements, details of the operations and
management, marketing research and policies, financial data, legal
requirements and tax obligations. Generally, feasibility studies precede
technical development and project implementation

FIVE COMMON FACTORS OF FEASIBILITY STUDY

The acronym TELOS refers to the five areas of feasibility - Technical,

Economic, Legal, Operational, and Scheduling.

1. Technology and system feasibility

The assessment is based on an outline design of system

requirements in terms of Input, Processes, Output, Fields,
Programs, and Procedures. This can be quantified in terms of
volumes of data, trends, frequency of updating, etc. in order to
estimate whether the new system will perform adequately or not.
Technological 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.

When writing a feasibility report the following should be

taken to consideration:

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  A brief description of the business to assess more possible
factor/s which could affect the study
 The part of the business being examined
 The human and economic factor
 The possible solutions to the problems

At this level, the concern is whether the proposal is both technically

and legally feasible (assuming moderate cost).

2. Economic feasibility

Economic analysis is the most frequently used method for

evaluating the effectiveness of a new system. More commonly
known as cost/benefit analysis, the procedure is to determine the
benefits and savings that are expected from a candidate system and
compare them with costs. If benefits outweigh costs, then the
decision is made to design and implement the system. An
entrepreneur must accurately weigh the cost versus benefits before
taking an action.

Cost-based study: It is important to identify cost and benefit factors,

which can be categorized as follows: 1. Development costs; and 2.
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 future value of a project is
also a factor.

3. 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.

4. Operational feasibility

Operational feasibility is a measure of how well a proposed

system solves the problems, and takes advantage of the
opportunities identified during scope definition and how it satisfies
the requirements identified in the requirements analysis phase of
system development (Bentley & Whitten, 2007).

5. Schedule feasibility

A project will fail if it takes too long to be completed before it

is useful. Typically this means estimating how long the system will
take to develop, and if it can be completed in a given time period

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 using some methods like payback period. 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.

BASIC KNOWLEDGE OF FEASIBILITY STUDY

1. Conduct a Preliminary Analysis. Begin by outlining your plan. ...

2. Prepare a Projected Income Statement. ...
3. Conduct a Market Survey, or Perform Market Research. ...
4. Plan Business Organization and Operations. ...
5. Prepare an Opening Day Balance Sheet. ...
6. Review and Analyze All Data. ...
7. Make a Go/No-Go Decision.

The two most important aspects of a feasibility study are the cost of
carrying out operations and the value that will be gained from the
operation. Hence, any worthwhile study will have both the ability to
reduce cost and increase or add value to an existing or potential business.
Thus the following are features and characteristics of feasibility study:

1. Very Articulate
2. Highly Systematic
3. Focused
4. Strategic in nature
5. Cost effective
6. Value adding
7. Organised
8. Flexible

TEN (10) TYPES OR FORMS OF FEASIBILITY STUDIES

Since the main objective of a feasibility study is to reasonably

uncover strength, weaknesses, opportunities and threats, its focus and
aim will be on virtually all aspects of a business- call it SWOT analysis if
you want. However, below are listed the most common studies that are
being carried out by both firms and individuals.

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 1. Economic feasibility
2. Legal feasibility
3. Implementation feasibility
4. Technological feasibility
5. Logical feasibility
6. Market feasibility
7. Financial (profitability)
8. Ethical | Moral feasibility
9. Time horizon feasibility
10. Environmental feasibility

TWELVE (12) SIMPLE STEPS NEEDED TO START AND FINISH A

FEASIBILITY STUDY

1. Establish The Aim And Objective Of A Study

2. Draw Up A Strategic Map To Follow
3. Carryout Economic Or Commercial Viability Analysis
4. Intricacies Analysis (Technical And Fundamental Analysis)
5. Human Resource Analysis
6. Analyse Competition
7. Evaluate The Potential Location
8. Financial Evaluation
9. What If Analysis (Sensitivity Analysis)
10. Evaluate And Analyse Marketing And Sales Strategies
11. Query Your Operational Capability
12. Legal And Environmental Analysis

SECTIONS OR COMPONENTS OF A FEASIBILITY STUDIES

REPORT

Just like a business plan, a good feasibility report must have

structure and components. Below are bulleted components of an FS.

 Executive summary
 Historical background or background information
 Proposed activities or operations (including financial projections)
 Comparison of prevailing system and the proposed system
 Timetable for the project
 Final recommendation and conclusion

PITFALLS OF FEASIBILITY STUDIES TO AVOID

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 In as much as the process of feasibility study revolves around
reaction of value and avoidance of costs, certain caveat has to be observed
else, the whole system will crumble. Some of the things that we must look
out for are:

 Signs of overinvestment of resources

 Reliability of the service provider i.e. the reputation of the
researcher
 Avoid releasing too much information to third party
 Avoid staying too long on a study
 Watch the action of your competition

Remember that the importance of ethics in this process of

conducting a feasibility study and writing a report afterwards cannot be
overemphasised. The process has to be transparent and realistic for it to
make any sense to both investors and lenders.

Technology students, must know how to conduct analysis that takes

all of a project's relevant factors into account—including economic,
technical, legal, and scheduling considerations—to ascertain the likelihood
of completing the project successfully .

The project summary is a one page document that consists of

separate overview, intellectual merits, and broader impacts sections. Each
of these three sections is required to be present and must be clearly
defined. The project summary is one of the most important parts of the
proposal. It is likely the first thing a reviewer will read, and is your best
chance to grab their interest, and convince them of the importance, and
quality, of your research before they even read the proposal.

Though it is the first proposal element in order, many applicants

prefer to write the project summary last, after writing the project
description. This allows the writer to better avoid any inconsistencies
between the two.

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 REFERENCESS

1. Feasibility Study by Dr. Eduardo Zeta Ramis

2. https://www.research.fsu.edu/research-offices/ord/nsf-career-
toolkit/home/writing-the-proposal/project-summary-and-project-
description/#:~:text=The%20project%20summary%20is%20a,and%20
must%20be%20clearly%20defined

3. https://accountantnextdoor.com/what-is-feasibility-study-meaning-
definition-characteristics-and-
process/#:~:text=The%20two%20most%20important%20aspects,an%20
existing%20or%20potential%20business.&text=Cost%20effective,Valu
e%20adding

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