Feasibility is the measure of how beneficial or practical the development of an information system will be to an organization

Feasibility analysis is the process by which feasibility is measured.

This is the study of a proposed project to indicate whether the proposal is attractive enough to justify more detailed preparation
A feasibility study is part of the process of project identification, preparation and selection
It involve the process of appraising projects or group of projects and then choosing to implement some of them
This is an extremely important stage in project management
Feasibility study is related to analyse the viability of the identified project to support decision making of investment.
As its name implies, it is a study to decide whether the identified project is attractive enough to go for implementation
The study needs inputs from many professional disciplines for various areas of the study
Availability of adequate market
Growth potential of the project
Investment, operation and distribution costs
Demand and supply factors
Social and environmental conditions
Why Feasibility Study?
- To find if there is adequate demand for the project’s output.
To find if there is availability of suitable technology and inputs
To find the best options
To answer if the project meets the environmental regulations and priority of the nations
To examine the project’s financial and economic viability
Areas of Analysis in Feasibility study
Demand/ Need and Market Analysis
Technical Analysis
Management Analysis
Financial Analysis
Economic Analysis
Environmental Analysis
Social Analysis

Operational Feasibility
Is the problem worth solving, or will the solution to the problem work?
How well would the candidate solution be received from management, system users, and organization perspective? (political)
Is the solution compliant with laws and regulations? (legal)
Market and Demand Analysis
Market and demand analysis look at the need of the project and help to estimate demand
It is the key activity for determining the scope of an investment, the possible production programs, the technology required and often
the choice of location.
Demands
Should government made six lane fast track road?
Should proposed cement factory plant be able to produce 100 metric ton of cement per day?
How many rooms to build in Sheration Hotel?
Market and Demand Analysis
The analysis cover mainly:
Aggregate demand for the product/service
The share of unfulfilled demand
Demand forecasting
Market price of product/service
Analysis of competitors, their strength weakness
Distribution mechanism
Technical Analysis
Every project must be technically feasible.
Technical analysis is related to examine whether the project under study is technically feasible to setup and operate to produce
service/product. For example, in agriculture project of Apple farming, types of field, soil test, temperature required in selected
location, location selection, plantation distance of between plants, variety etc needs to be analyzed.
Technical Feasibility
Is the proposed technology or solution practical?
Do we currently possess the necessary technology?
Do we possess the necessary technical expertise, and is the schedule reasonable?
Technical Aspects to be Considered
Technology:
Choice of technological process and/ or appropriate technology,
Is the technology proven or tested?
Does the technology/ process/ equipment technically fit with the facility’s existing technology/process/ equipment & machinery?
Equipment capacity & whether it is as per requirement
List of recommended equipment suppliers.
Reputation of the suppliers and performance guarantees

Technical Aspects to be considered Cont.

Investment cost and operational cost of different technology/process
Environmental aspects of different technology
Location aspects of the project and availability of infrastructural facilities with probable alternative locations
Inputs: Availability of electricity, water, fuel, raw materials
Size and scale of operations: based on the demand, capital requirement, and technology, inputs available
Schedule Feasibility
Given our technical expertise, are the project deadlines reasonable?
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 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.
Management Analysis
- If the management is incompetent, even a good project may fail. So it looks at:
Types of organisation
Academic qualification, and experience of key persons
Availability of personnel required for project execution.
Assessment of other specific skills required for the project
User’s role in case of development projects etc.

Financial Analysis
The scope of financial appraisal varies considerably with the nature of project and whether it is revenue producing (e.g. industry,
agriculture) or not (e.g. roads, public schools).
Financial analysis covers:
- Investment Cost Estimation
- Operating Cost Estimation
- Benefits Estimation
- Cost Benefits Comparison
- Project Selection Decision

Economic Analysis
Economic analysis estimate and analyze the project’s net contribution to the whole economy of the region or country.
It helps determine whether the project increases the net wealth of a region or country as a whole or not.
Estimation of Economic Costs of Projects
Estimation of Economic Benefits of Projects
Comparing Costs and Benefits
Environmental Analysis
A project may causes environmental impacts in many ways
Identification and analysis of adverse effects on the environment
Identification of positive impacts
Required Mitigation measures
Designing environmental management plan
Provision of fund for environment management plan
Main acts/guidelines in Nepal are Environment Protection Act 1996, the Environment Protection Regulation 1997, National
Environmental Impact Assessment Guidelines, 1993. The analysis should meet the requirements mentioned by these acts and
regulations

Social Analysis
A project may causes social impacts in many ways
Will the project have any adverse effects on the society?
What are positive and negative impacts
Viable measures to address negative impacts
Estimating cost for addressing social impacts

Initiating the Feasibility Study

Appointment of an experienced manager and Selection of study team members
Scope of the study
External Advisers to support study team
Plan and Schedule the Study
Starting study as per plan and schedule
Controlling study to complete as per per plan and schedule

Completing the Feasibility study

The feasibility study should act as a springboard for the next phase in the project life cycle. – design and appraisal –ensuring that it is
able to commence in a focused way. The end product of Feasibility Study should therefore comprise a clear, concise report, called
Feasibility Study Report
Feasibility includes
Project name
Problem or opportunity definition
Project description
Expected benefit
Consequence of rejection
Resource requirements
alternatives
Other consideration
Theorization

Types of feasibility Study

1. Technical feasibility
can a solution be supported with the existing technology or not?
2. Economic feasibility
is the existing technology cost effective?
3. Operational feasibility
Will the solution work in the organization if implemented?
Feasibility Study
A Feasibility Study is the analysis of a problem to determine if it can be solved effectively.
The results determine whether the solution should be implemented.
This activity takes place during the project initiation phase and is made before significant expenses are engaged.
A Business Plan identifies key areas of your business so you can maximize the time you spend on generating income.
Key investors will want to look at your Business Plan before providing capital.
A Business Plan helps you start and keep your business on a successful path.
You should prepare a Business Plan, although, in reality, many small business owners do not.
A Business Plan is a written document that defines the goals of your business and describes how you will attain those goals.
A Business Plan is worth your considerable investment of time, effort, and energy.
A Business Plan sets objectives, defines budgets, engages partners, and anticipates problems before they occur.
10 Reasons Why You Need a Strong Business Plan
To attract investors.
To see if your business ideas will work.
To outline each area of the business.
To set up milestones.
To learn about the market.
To secure additional funding or loans.
To determine your financial needs.
To attract top-level people.
To monitor your business.
To devise contingency plans.

How Detailed Should

Your Plan Be?
Business plans differ widely in their length, appearance, content, and the emphasis placed on different aspects of the business.
Depending on your business and your intended use, you may need a very different type of Business Plan:
Mini-plan: Less emphasis on critical details. Used to test your assumptions, concept, and measure the interest of potential investors.
Working Plan: Almost total emphasis on details. Used continuously to review business operations and progress.
Presentation Plan: Emphasis on marketability of the business concept. Used to give information about the business to bankers,
venture capitalists, and other external resources.
Assembling a Business Plan
Every Business Plan should include some essential components:
Overview of the Business: Describes the business, including its products and services.
The Marketing Plan: Describes the target market for your product and explains how you will reach that market.
The Financial Management Plan: Details the costs associated with operating your business and explains how you will pay for those
costs, including the amount of financing you may need.
The Operations and Management Plan: Describes how you will manage the core processes of your business, including use of human
resources.
Seven Common Parts of a
Good Business Plan
Business plans must help investors understand and gain confidence on how you will meet your customers’ needs.
Seven common parts of a good Business Plan are:
Executive Summary
Business Concept
Market Analysis
Management Team
Marketing Plan
Financial Plan
Operations and Management Plan

Part 1: Executive Summary

The Executive Summary of a Business Plan is a 3-5 page introduction to your Business Plan.
The Executive Summary is critical, because many individuals (including venture capitalists) only read the summary.
The Executive Summary section includes:
A first paragraph that introduces your business.
Your business name and location.
A brief explanation of customer needs and your products or services.
The ways that the product or service meets or exceeds the customer needs.
An introduction of the team that will execute the Business Plan.
Subsequent paragraphs that provide key details about your business, including projected sales and profits, unit sales, profitability,
and keys to success.
Visuals that help the reader see important information, including highlight charts, market share projections, and customer demand
charts.
Part 2: Business Concept
The business concept shows evidence that a product or service is viable and capable of fulfilling an organization's particular needs.
The Business Concept section:
Articulates the vision of the company, how you plan to meet the unique needs of your customer, and how you plan to make money
doing that.
Discusses feasibility studies that you have conducted for your products.
Discusses diagnostics sessions you had with prospective customers for your services.
Captures and highlights the value proposition in your product or service offerings.
Part 3: Market Analysis
A Market Analysis defines the target market so that you can position your business to get its share of sales.
A Market Analysis section:
Defines your market.
Segments your customers.
Projects your market share.
Positions your products and services.
Discusses pricing and promotions.
Identifies communication, sales, and distribution channels.
Part 4: Management Team
The Management Team section outlines:
Organizational Structure: Highlights the hierarchy and outlines responsibilities and decision-making powers.
Management Team: Highlights the track record of the company’s managers. You may also offer details about key employees including
qualifications, experiences, or outstanding skills, which could add a competitive edge to the image of the business.
Working Structure: Highlights how your management team will operate within your defined organizational structure.
Expertise: Highlights the business expertise of your management and senior team. You may also include special knowledge of budget
control, personnel management, public relations, and strategic planning.
Skills Gap: Highlights plans to improve your company’s overall skills or expertise. In this section, you should discuss opportunities and
plans to acquire new information and knowledge that will add value.
Personnel Plan: Highlights current and future staffing requirements and related costs.
Part 5: Marketing Plan
The Marketing Plan section details what you propose to accomplish, and is critical in obtaining funding to pursue new initiatives.
The Marketing Plan section:
Explains (from an internal perspective) the impacts and results of past marketing decisions.
Explains the external market in which the business is competing.
Sets goals to direct future marketing efforts.
Sets clear, realistic, and measurable targets.
Includes deadlines for meeting those targets.
Provides a budget for all marketing activities.
Specifies accountability and measures for all activities.
Part 6: Financial Plan (Slide 1 of 2)
The Financial Plan translates your company's goals into specific financial targets.
The Financial Plan section:
Clearly defines what a successful outcome entails. The plan isn't merely a prediction; it implies a commitment to making the targeted
results happen and establishes milestones for gauging progress.
Provides you with a vital feedback-and-control tool. Variances from projections provide early warnings of problems. When variances
occur, the plan can provide a framework for determining the financial impact and the effects of various corrective actions.
Anticipate problems. If rapid growth creates a cash shortage due to investment in receivables and inventory, the forecast should
show this. If next year's projections depend on certain milestones this year, the assumptions should spell this out.
Part 6: Financial Plan (Slide 2 of 2)
The Financial Plan is the most essential part of your Business Plan. It shows investors the timeframes you have scheduled to make
profits.
Some elements of the Financial Plan include:
Important Assumptions
Key Financial Indicators
Break-even Analysis
Projected Profit and Loss
Projected Cash Flow
Projected Balance Sheet
Business Ratios
Long-term Plan
Different Financial Planning Options (Slide 1 of 2)
Short-term Forecast: Projects either the current year or a rolling 12-month period by month. This type of forecast should be updated
at least monthly and become the main planning and monitoring vehicle.
Budget: Translates goals into detailed actions and interim targets. A budget should provide details, such as specific staffing plans and
line-item expenditures.
The size of a company may determine whether the same model used to prepare the 12-month forecast can be appropriate for
budgeting.
In any case, unlike the 12-month forecast, a budget should generally be frozen at the time they are approved.

Different Financial Planning Options (Slide 2 of 2)

Strategic Forecast: Incorporates the strategic goals of the company into the projections. For startup companies, the initial Business
Plan should include a month-by-month projection for the first year, followed by annual projections for a minimum of three years.
Cash Forecast: Breaks down the budget and 12-month forecast into more detail. The focus of these forecasts is on cash flow, rather
than accounting profit, and periods may be as short as a week in order to capture fluctuations.

Part 7: Operations and Management

The Operations and Management section outlines how your company will operate.
The Operations and Management section includes:
Organizational structure of the company. Provides a basis for projected operating expenses and financial statements. Because these
statements are heavily scrutinized by investors, the organizational structure has to be well-defined and realistic within the
parameters of the business.
Expense and capital requirements to support the organizational structure. Provides a basis to identify personnel expenses, overhead
expenses, and costs of products/services sold. These expenses/costs can then be matched with capital requirements.
The business plan is not abstract, uninformative, theoretical or wierd!
It’s a document that convincingly demonstrates that your business can sell enough of its product or service to make a satisfactory
profit and be attractive to potential backers
A document that conveys your organization’s prospects and growth potential. It describes:
– You and your products and services
– The market and your role in it
Shows you are committed to achieving a vision
Good follow-up to developing a strategic plan
Keeps focus on end product
Keep in mind that. . .
This is an opportunity to work on the business
This is important and difficult work but not urgent
The value of the work will increase as you share, review, and update the business plan

Levels of Feasibility Assessment

A feasibility study of an idea is conducted at three levels
Operational Feasibility
“Will it work?”
Technical Feasibility
“Can it be built?”
Economic Feasibility
“Will it make economic sense if it works and is built?”
“ Will it generate PROFITS?”

A Business Plan summarizes the plan of action after a course of action has been determined through the Feasibility Study
A Business Plan provides a Planning function
A Business Plan outlines the actions needed to take the proposal from “idea” to “reality”
A Business Plan tells How your business will be created and Why it will be successful
A Business Plan provides a road map for strategic planning
The Story a Business Plan Tells…
Business Plan should be tailored to the stakeholders
Be aware of each potential stakeholder’s priorities
Make sure all priorities are addressed in a balanced manner in the business plan
If more than one version of a business plan is written, make sure each tells the SAME story only with difference emphasis
Who is the “Target” of a Business Plan?
Stakeholder Issues to Emphasize Issues to Deemphasize

Cash-Flow, Assets,
Banker Fast Growth, Hot Market
Solid Growth

Fast Growth
Investor Assets, Large Market, Management Team
Potential

Strategic
Synergy, Proprietary Sales Force, Assets, Products
Partner

Large
Stability, Service Fast Growth, Hot Market
Customers

Key Security,
Technology
Employees Opportunity

Merger &
Past
Acquisition Future Outlook
Accomplishments
Specialist

What resources are available to help develop each?

Hired Business Consultants
Make sure an accurate assessment is given
Make sure someone is not paid to give the answer the group wants to hear
Can be costly
Third Party Unbiased
Universities
Center for Agribusiness & Economic Development
Small Business Development Center