Professional Documents
Culture Documents
Importance of Feasibility Study in The Realization of Project Objectives
Importance of Feasibility Study in The Realization of Project Objectives
Research Publications
ADEMIJU, Samuel Adebayo
Author
PG/EMBA/98/0001
Objectives
Department Faculty
Business Administration
Management
May, 2001
Date
Ogbonna
DN: CN = Omenuko Sunday Ogbonna,
Sunday Ogbonna C = NG, O = University of Nigeria, OU
= Innovation Centre
Reason: I have reviewed this document
Date: 2008.12.01 12:39:02 -12'00'
IMPORTANCE OF FEASIBILITY STUDY IN THE
REALISATION OF PROJECT OBJECTIVES. "AN
EMPIRICAL ANALYSIS OF SOME SELECTED
PROJECTS".
'\
DEPARTMENT OF MANAGEMENT
FACULITY OF BUSINESS ADMINISTRATION
UNIVERSITY OF NIGERIA, ENUGU CAMPUS,
ENUGU.
MAY 200'1
IMPORTANCE OF FEASIBILITY STUDY IN THE REALISATION
O F PROJECT OBJECTIVES. "AN EMPIRICIAL ANALYSIS O F
SOME SELECTED PROJECTS".
-
MAY 2001
\
CERTIFICATION
Administration (MBA)
The work embodied in this report is original and has not been submitted in
part or in full for any other degree or award of this university or any other
University
............................ .............................
Professor E.U.L. Imaga C.0' ~ ~ ~ u k w u
Supervisor Head of Department
DEDICATION
iii
ACKNOWLEDGEMENT
It is a saying that "to give honour to whom it is one is an honour for which
no one can sue". I so give glory to the Almighty God who spiritually
support throughout the course of the project may the merciful God continue
Finally, I my appreciation goes to Mr. Mark C. Ukegbu for the for the
Samuel Ademiju
May 200 1.
ABSTRACT
Title page
Certification
Dedication
Acknowledgement
Abstract
Table of contents
vii
Typical structure for a Feasibility study 14
feasibility study 22
References
3.1 Introduction
3.3 SourcesofData
4.1 Introduction 39
6.2 Conclusion 92
6.3 Recommendations 93
Bibliography 95
Appendix - Questionnaire 97
CHAPTER ONE
INTRODUCTION
studles, the standard and depth of such studies are often adequate. As a result
of this deficiency, many industrial ventures had run into critical problems or
even folded up within a short spatx of time after the start - up of operation.
The first positive step in business planning is feasibility study. To minimise the
Feasibility reports are highly valued world wide. Apart from their common use
as business planning documents, these reports are put into various other related
uses. For instance, owing to a very high poverty level, most prospective
sourcing.
has now been earmarked. All these programmes stimulate the demand for
feasibility studies.
solution to a problem.
realization.
that feasibility studies are not all plain sailing. The conclusion may be
4
reached that the proposed project would be uneconomic and not in the best
The fact still remain that the amount spent on feasibility study is not wasted
whether the project is camied out or not. It will be established in thls project
that it pays not to carry out a project that will later be abandoned. The amount
to spend on such project will be more the amount paid for feasibility
studies.
The following hypothesis can be formulated in relation to the topic under study:
Tlus study is carried out with the hope that the following parties will benefit
fiom it.
any project.
invest in any venture there is need for further plan. This can best be
7. Financial Institutions who lend money for business venture will find the
information in this study useful. It will show the fact that not every
influence, something that need to be treated seriously and having a great effect.
Realization: This is the act of converting (a hope, plan etc.) into a fact.
Obiective: Objective constitute the basic purpose of a firm. The aim, target or
2.1 INTRODUCTION
There are many definitions of feasibility study from different Authors. The fact
is, the definitions are similar, but having subtle distinctions; John E. Walsn Jr.
undertaking.
tentative project.
9
Mr. Chidi Agubs, a management consultant based in Lagos in one of his
their product. Because of the emphasis on innovation, change is not only a sign
He want further to say that when one proposal is presented, the company must
decide whether to act upon it; if several are presented, the base one must be
selected. Separating the good ideas &om the bad, and the practical ones from
judging proposed ideas and recommending whether they should be acted upon
recognised to check out for side effects which only the management are in a
reports.
venture. According to him, feasibility study do not only answer the questions
of whether the ideas for a new or expanded business operations are expedient.
The studies go further to identify those actions that if taken or followed, will
help assure success of new business venture or the continued success of the
If the idea for the new business venture is practicable, a good feasibility study
Ralph Von Gersdorff in his article "The making of feasibility studies" describe
the need for feasibility study before start of project. According to him
feasibility studies are needed by firms and institution which ant to expand old
lines or start new production lines. Projects or the finding of suitable projects
be applied for.
Gerald A. Silver on his own said "The systems department has developed a
study". According to him it purpose is to gather analyse and document the data
practicality.
feasibility study since each study is concerned with adifferent project usually
profitability analysis.
Osuagwu on his own part gave eleven features of a business feasibility: They
Manpower requirement
Cash budget
engage in the business or not. Certain guidelines that will help in taking a
Steven Pauley on his own part gave three hypothetical situation to show the
(2) capability:
(2) Capability
(a) to meet f
hpresent requirement
(b) to meet requirement if firm expand
(d) Taxes
into the major categories of "cost" and capability. These criteria do not apply
to all feasibility problem but an effort should always be made to limit the
number of major criteria; doing so helps organize both the investigative and
Ralph Von Gersdorff described the structure of a feasibility study as check list
for the collection of data. He explained that feasibility studies should start with
a check list of data sought. This list can be broken down into six sections: (1)
Materials and supplies (2) Market factors (3) Economic and technical
factors (4) Personnel (5) Financial factors and (6) Social factors.
Walsh Jr. described the stages and activities leading to the development of a
feasibility study as intuitive stage which aptly describes what take place in I/
of facts and opinion, weighmg them and taking into account unknown
The pre-feasibility study is likened to a "mini feasibility study" with the basic
purpose of quickly evaluating areas essential to the project decision. The basic
expenses.
in three phases. The first, called the Preliminary study in concerned with
determining whether or not the direct or indirect benefit gained fiom the new
system will be greater than the cost involved. If the answer is no, the feasibility
If the answer is yes, the analysis enter the phase the investigative study. There
the problem is carefully defined and all details in the solution are specified.
The last phase of the feasibility study according to him is the final report. It
fully documents the work done during the first two phase. All expected cost,
benefit and outcomes are shown. It tells how and hen the new system should
the prospects will appear so outstanding and the risk so small that a feasibility
study is not required while situation like this are extremely rare they do occur
for example, when the invested capital is small and can be paid back in a short
time - say from six months to a year. It is also possible the prospects can be so
utterly dismal that the project is eliminated from further consideration, and this
Without question, most project will require more detailed information and a
attained.
Subseauent Stape: Once the decision has been made that the project is
Agubas in one of his write up put forward important factor. This is the
ignorance and neglect) and shortage of spare parts. Unduly high rates of
depletion and waste of scarce capital assets are the rule rather than the
exception.
Many projects can be carried out only if other facilities are available or are
provided at the same time. For instance, the establishment of an iron are mine
transport the raw material and the finished products. Feasibility studies must
take into account not only the usual types of protection in force, such as
imposition of import duties or quotes for infant industries, but also limitation on
Distribution services are often inadequate in underdeveloped countries. Profit
are mostly made on exaggerated mark ups rather than on the expansion of
the existing services and their costs and prices but also consider the possibility
Other area that need to be review in literature is the computer feasibility study.
He was of the view that before electronic computer can be installed, very
undertaken.
In his opinion computer feasibility study start with prospective and approach.
nature. They will have problem to face during the course of their studies.
Perhaps the most important is how to make the right approach to the
examination.
start, preparation, the detail, individual functions and charting the details.
following:
Fit with long-and medium terms plans. Cost and benefit summary, project
interest to management.
the data base content, listing the entities and relationships and their attributes
which are to be recorded by the system. Control, integrity and security and
security features.
Future Plan: Overall project plan. Detailed plan for the analysis phase.
26
Avvendices: References to document read or mentioned in report. Supporting
network etc. being mainly copies of or extracts from the standard system
documentation files.
John E. Walslh Jn. explained the relationship between feasibility study and
funds, it must borrow money to build a plant buy land, machine tools,
equipment, material and obtained technical assistance for long term capital
(IFC), The Private Investment Corporation and Development Bank require the
feasibility study except it point of view has a built in biase - a biase favouring
the borrower. The prospects should be a total and comprehensive and give due
recognition to every aspect of the company over the short and long run
27
that is relevant for the lending Institution to determine whether loan should be
granted.
From the review of related literature, it was established that feasibility study is
the first step in business planning. In fact every forward loolung entrepreneurs
business plan. The study may be carried out by potential investor especially if
The literature review enable us to know that feasibility studies dig into the past,
examine the present and project into the fbture, analjysing the trends including
examine the history of the newspaper industry, even if briefly; identifj. both
successed and failures in the business trends, as well as weakness, strength and
prospects.
realization of project objective. After the feasibility study have been prepared,
feasibility analysis phase without being revised in a major way. Infact, a fairly
\
high percentage of business opportunity conclusion will be proven invalid
to discover the bad news after major resources have been committed.
must pass through various analysis; these are market or Economic, Technical,
opportunity?"
REFERENCES
1. Batty J., Development in office management page 207 p 219.
(Publishers) Ltd.
13. Chen, Kung K. (198 1) Financial mgt vol. 10 No 1 198 1 pp5 1-60.
14. The Guardian, Tuesday 17, 1999, August 3 1 1999 and September 21,
5, page 23.
RESEARCH METHODOLOGY
3.1 INTRODUCTION
This type of research make use of both secondary or historical and Primary
data. Secondary data refers to data collected and assembled for some project
other than this one. Examples or such data were extracted from Newspapers,
From the secondary data the nature and purpose of feasibility studies was seen.
Those studies that were used to realise the objective of a project and those that
was not used because the project proved not to be viable as a result of the
The Primary data are those gathered and assembled specifically for this project.
For the purpose of this, a research process was carried out which finally
produced a report.
3.2 RESEARCH DESIGN
For the purpose of carrying out this research, survey research method was
used. This require asking people who are called respondents for information,
using both verbal and written questioning. For this purpose, Questionnaires
and Interviews were utilized to collect the data necessary for this research.
Sample survey which shows the representative sample of the target population
(a) Primary Sources: Data were collected fiom consultancy firms, Auditing
analysis.
The population for this study comprises firms, Executive and Directors in both
professional, and Traders. The study make use of Lagos state as base. So,
35
all the above organisations are those based in Lagos state only.
Generally, fifty different organisation were used as the population for the
study.
For the purpose of this study, five different organisation were studies as
representative of all the Fifty organisation that make use of feasibility studies in
Lagos State. The result obtained showed what is obtained in other companies.
For this type of research, a systematic sampling method was used. This means
out of fifty different organisation that makes use of feasibility studies only five
Lagos State. The sample size is five. With this plan, when a list of all the 50
organisation were supplied, we shall pick 10th name fiom the list, that is,
The instrument used for this research was questionnaire and standardized
interview. In order to make the results obtained valid and reliable, the scoring
were made to be accurate and systematic. The interview carried 60% while
The tool used involve calculation and interpreting descriptive statistics. By this
The study covered the organisations in Lagos State only. Five different
4.1 INTRODUCTION
working hypothesis postulated for this survey. Through the questionnaires, the
respondents gave their opinions about the use of feasibility study to achieve
project objectives.
completed and returned. The low response can be attributed to the fact that
misplaced them. Some of the respondents travelled and many were unable to
0- Frequency % Frequency
a Yes 33 73%
b No 12 27%
From this presentation, it was discovered that many businessmen have used
feasibility study in one way or the other before. The 73% that chose "yes" for
answer were mostly in private sector. The 27% that took 'No' for answer were
a Auditor 18 40
b Management Consultant 15 33
c The Promoters 5 11
d Investment department 7 16
Majority of the respondents make use of their Auditors for the preparation of \
the feasibility study. 40% of the respondent confirmed that Auditor prepare
feasibility for them. 35% make use of management consultant, 11% said the
promoters prepared the study for them and 16% said it was their analysis was
that majority of the respondent prepared the study for expansion purposes.
It was discovered fiom the above table that most people prepared feasibility
study purposely to obtain loan. This account for why 33% of the respondent
picked processing of application for loans. Next to this was the business
40
expansion. Most of the companies that prepared feasibility study for execution,
The above table shows ways of getting funds for business operation. Most
survive. 29% of the respondents agree that they use loans fiom financial
Institutions. Selling of share came next and carried 24% of the respondents. /
Most small scale business make use of the profit generates fiom business
i
transaction to increase their fund. This account for 20%. Ministries and
41
extra-rninistries establishment depend on statutory allocation and taxes.
project objective
Excellent 18 40
Good 16 36
Fair 9 20
Poor 2 04
In evaluating the use of feasibility study, most people describe its use in their
Other people describe its use as good. This group account for 36%.
Table 6: Question as to whether the respondent know other company that
Yes 32 71
No 13 29
From the response received on this question, majority Knew other company
that made use of feasibility study. 71% picked 'yes' for answer while 29%
have not known any other company that use feasibility study.
for loans as the main reason. W e r said the purpose was to determine the
Yes 31 69
No 14 31
people that answered 'No' are from public sectors. Some of them don't even
a Yes 21 47
b No 24 53
It was discovered fiom this analysis that most organisations had in the time past
abandon some projects. 47% of the respondents agreed to the fact that there
The following are the reasons the respondents gave for the abandonment of
project:
1) Inadequate funds
2) Improper planning
5) Instability of government
The above points still explains the importance of feasibility in achieving project
With the preparation of feasibility study, all the points raised by the respondent
to project failure.
This table shows that most people believe that lack of preparation of feasibility
can lead to project failure 60% of the respondent agreed to thls fact. Most of
the 40% who answered 'No' are executive from public sectors and some non-
respondents next to his is the use of Technical partners which 24% chosed.
The three people who picked "others" did not know the meaning of technical
a Techcal Aspect 8 18
b Economic or Market 12 27
c Financial Aspect 14 31
d Managerial Aspect 11 24
It was discovered that 14 out of the 45 respondent which represent 3 1%of the
achievement of project objectives. This account for the reason why most
institutions.
Options .
Rank 2
Rank 4
actually limit the use of feasibility study depend on the prevailing situation in
a Lack of awareness 12 27
c Illiteracy 10 22
The main reason why most business man in developing countries fail to use
feasibility study is the cost of preparing the study. This account for 33% of the
respondents. Next to this is the lack of awareness which took 27%. Illiteracy
and presence of small scale business account for 22% and 18% respectively.
4.2 AN EMPIRICAL ANALYSS OF FOUR SELECTED PROJECTS
Consultant.
the bank and sell the idea to Federal Auports Authority of Nigeria
(NAA) The major objective of this bank was to address the financial
projects.
In the opinion of the promoter of this bank, the existing commercial and
merchant banks have over the years tried to finance project in aviation
sectors, but .they have not been specilised enough to adequately help the
sector to get off' the ground. They also observed that because
52
most projects in the transport and aviation sectors require huge capital
outlay, individuals and corporate bodies have not been able to source
The feasibility study was prepared based on the standard required by the
central bank of Nigeria. The study was divided six chapters a and a
Chapter two gave the Nigeria Economic profile. This chapter was
described the nature of the Nigeria financial system under five sub-
The name, Aero Merchant Bank Limited was described in chapter four
under six sub-headings. The Background showed why the bank was
conceived. The promoter explained that the bank will take initiative of
sectors.
Objectives of the bank which were said to be contained in its memorandum and
Articles of Association make the second sub-heading. The third sub- heading
was the organisation structure. The proposed bank was designed to adopt a
corporate structure that was consistent with and necessary to achieve its goals
The forth sub-headmg was on departments into which the bank was
dealt with capital structure and funding. The extract fiom the main study
BOARD OF DIRECTORS
0 MANAGING DIRECTOR
MANAGER - ADMINISTRATION
MANAGER - ACCOUNTSJFINANCE
CORPORATE
CORPORATE CORPORATE
FINANCE
,
PORTFOLIO
MANAGEMENT
LOAN SYNDICTATIONS
PROJECT FINANCE
DISCOUNTABLE
INVESTMENTS
SPECIALISED
LIVERAGED
FUNDING
.
MANAGEMENT
SERVICES MEGER
& ACOS
INVESTMENT
BANKING
F
RADE FINANCE
ORRESPONDENT
BANKING
DOMESTIC &
INTERNATIONAL
REASURY FX
MARKETING
Capital Expenditure
Pre-operational Expenses
Total
only. They are (1) Bases and Assumptions underlying the financial (2)
Accounting policies.
The last chapter of this feasibility study is chapter six which showed the
financial projections of the project and conclusion. The whole chapter was
(1) Loans and Advances (2) Loan policy (3) Deposit Generation
(12) Profit and loss projection (13) Cash flow projection and
(14) Conclusion.
In the concluding part of the study it was clearly emphasized that the main aim
aviation industries.
The central Bank of Nigeria accepted this feasibility study. A letter was issued
to the promoter of the bank to subrmt documents for the insurance of licence to
operate (see appendix 11) for the copy of the letter. In the letter, 120 copies of
the feasibility study were required to be submitted. This shows the important
Inspite of the lot of money spent on this study, it was found not to be feasibility
I
at that time. l'he project was confirmed that N80,000.00 was spent on the
professional fi-iends in the viability or otherwise of the object was embark upon
The feasibility study was divided into five chapters. Executive summary was
placed in the whole of chapter one. The executive summary summarised the
detailed study in few words. It explained the need for an airline that afford
The promoters decided to use B707 combined and they proposing to make use
The Executive summary also gave brief explanation of the Technical and
/
chapter as well. The total captalisation for the project was estimated at
The viability analysis of the project revealed a pay back period of five(5) years
In the concluding part of the Executive summary, it was stated that the study
background, pioject concept stated that the airline was to provide both
passenger and cargo transportation services w i h n the ECOWAS countries out
the initial stage and will complement the service of existing airlines on the
routine.
Market study was placed in chapter 3. This chapter concerned itself with the
demand, supply and competition in the aviation industry and the implication of
services using B707 combi aircraft. The promoter made use of the inability of
the Nigeria Airways to embark on cargo operation on the West Coast route.
Statistics on cargo freight and cargo move were presented in the study. Both
revenue fi-om cargo and passenger showed that there was prospect in the
could be airlifted. Using a load factor of 50% and an average tariff of N3,SOO
explained that the airline business usually succeeds, when there is a high
regards to aircraft brokerage. The need for an overseas technical partner was
The management of the airline was discussed and analysed. The Board of
including stating clearly the objectives of the airline. The General Manager and
Project promoters 3
Technical partners
Major shareholders
The organigram proposed for the airline has three (3) major divisions:
(a) Finance/Administration
(b) SaledMarketing
(c) Operations
The study recommended three(3) Managers for the take off of the venture.
Chapter 5 focused on the financial sb-ucture and project capitalisation for the
proposed airline. The project was proposed to have an initial capital outlay of
Estimate of working capital, office furniture and Equipment, loan and interest
project is less than 5 years. The return of Investment (ROI) was calculated to
be 39.34% Internal Rate of return was 26.8%the Internal rate of return for the
project was 26.8%and this was higher than the expected cost of capital at that
time whch was 21%. In the final analysis the project was considered to be
viable moreso when the discounting factor of 21% (Interest rate) gives a
GEENUAL MANAGER
CHIEF PILOT
funds for the project. Aircraft were leased to the promoter and the flight
certificate No RclOlO87.
that is, buying and selling of drugs, both on wholesales and retail basis. Before
1989, the company had two main stores within Lagos metropolis and they are
duly registered with the pharmacist Board of Nigeria. The company later
Feasibili S
Kunle Ladejobi and company a firm of Chartered Account had been the
certificate No RclOlO87.
that is, buying and selling of drugs, both on wholesales and retail basis. Before
1989, the company had two main stores within Lagos metropolis and they are
duly registered with the pharmacist Board of Nigeria. The company later
was passed in 1989. This explained why the company needs additional funds
for the business. Kunle Ladejobi and Co., was mandated to prepare a
The feasibility study was prepared with eight (8) chapters, this include, brief on
Based on this study, UBA gave lcun to the company. The proposed
of widering and upgrading its existing productive facilities towards meeting the
The study was divided into seven (7) chapters and the opening page was taken
The project was conceived and established in 1989 as a down steam project for
the production of dental powder of high quality with over 60% local content.
Ever since its coming on steam the project has witnessed years of successful
and prosperous operations, establishing a large clienteles all over Lagos State
through its high class quality products and efficient customer service.
The company is now desirous of widening and up-grading its operation through
productive facilities towards meeting the demands of its enlarge local market.
To enable it achieve this objective, the company is seeking to avail itself of the
It is pertinent to note that the data used throughout this study comprised actual
operation parameters sieved out &om the company's books and extrapolated,
where need be, as well as data derived from verified information and authentic
publication.
the country.
The financial consideration covered the project cost financial plan and the
analysis of ope;ating costs. The details of the estimated for the total investment
requirement for the implementation of the project were provided. What
attracted attention was the comparison of the existing assets with the assets to
Chapter 6 of this study dealt with profitability Analysis. Cash flow analysis,
pay back period, projected Debt service, Net present value and profitability
initial investment outlay on this project could be recouped in less than 2 years
liquidity. The annual ability to service debt ratio was calculated thus; Year 1
1.58; Year 2 4.81; year 3 7.66; year4 8.79 year 5 10.08. Therefore, debt
service coverage ratio @.S.C.R) average = 6.58. This with an impressive debt
service ratio, rising even from first year, the project was capable of liquidating
Net present value was calculated to be positive at 21% discount rate. This
indicates that the project had the potential for making positive contribution to
the overall wealth of its . shareholders. By and large, it had been aptly
demonstrated fro the foregoing analysis that the project satis@ all criteria for
profitability. Based on this study, the company was able to get loan for its
expansion programme.
CHAPTER FIVE
DISCUgSiON OF RESULTS
projects. In discussing the topic, data were presented and analysed. The result
obtained shows various areas to which feasibility study can be used to achieve
time. Most organisations visited for the purpose of this research work believed
objectives.
The analysis of four selected projects explained in practical terms, the use of
feasibility study. The first one was that of the establishment of Aero Merchant
Bank Ltd., The promoter prepared a good feasibility study which was
presented to and accepted by the Central Bank of Nigeria. When the feasibility
study was analysed by the parent company, it was rejected on the basis that the
We learn from this analysis that not all feasibility studies can be relied upon for
established then, is likely it wouM have been one of the distressed ones by
now. For this reason the cost of the feasibility study for this project was not a
waste if compared to what would have been wasted if the bank was distressed.
Airline, the feasibility was used to raise funds. Subsciber found the project to
be viable in all aspects. Aircraft were leased and the flight began. This was a
/
case where feasibility study was used to achieve the project objectives.
Other business organisation selected for analysis was Efmpo Pharma Stores
Ltd. This shows a situation where feasibility study was prepared for business
expansion. The firm of chartered Accountant prepared the study to obtain loan
when United Bank of M c a (UBA) accepted the feasibility study and gave
loan for the execution of the project. What made this project possible was the
The fourth project analysed was the modernisation and expansion of Best
the feasibility study, the company was able to obtain loan to enlarge its
productive facilities.
From these four project we can see the role played by feasibility study whether
From the questionnaires administered and the Interview conducted, we are able
to bring out more fact about the use of feasibility study. Different question ere
asked and the answers given by respondent enable us to know how important
73% of the respondent agreed that they have used feasibility study in carrying
out a project before. My research shows that those who had not been using the
study are mostly found in the public sector. In this kind of environment,
It was discovered that the main purpose of preparing feasibility study is for the
processing of application for loans. This account for 33% of the respondents.
Next to this is for expansion purposes which took 24%. Other reasons include
for viability and feasibility of the project for execution, monitoring and
In practical term we can see that the main reason why business men prepare
The question as to who prepared the feasibility study was answered based on
the options given. In the four o@ons given 40% picked Auditors as the person
who prepared feasibility study while 33% accepted that management consultant
prepared it. This proved a point that it was professionals that can prepare an
department 16% and the promoters 11%. The summary of this that most
were given. 33% of the respondent picking processing application for loans
and next to this was for the business expansion which 24% of the respondent
picked. What I observed f i m all these was that feasibility study can be
prepared before the beginning of a project or when the project was going on.
From the responses received fiom business executives about the source of fund
institutions carried the highest percentage of 29% of the six options given. The
next one was fund from selling of shares which carried 24Y0and profit from
business transaction took 20%. Donation, gift and funds from parent
respondents. Based on this result, we can see the reason why majority use
as excellent while 36% ranked it as been good 20% ranked it as fair and 4%
ranked it poor.
they know other company that made use of feasibility study apart from their
own. 71% of the respondents picked "yes" for an answer while the rest 29%
picked "No". This gave us the assurance that many companies made use of
feasibility study. When asked further the purpose preparing the study, the
reason given were the same as was given earlier. That is, to process
application for loan, for expansion of business and to determine the viability
Respondents gave their support for the use of feasibility in the achevement of
project objectives, a question was asked whether the study is important. 69%
of the respondents choose "Yes" for an answer. The rest 31% disagreed.
They argued that other points like proper supervision of a project, availability
important role, which others follow. It is the foundation upon which a business
rest.
Questions as to project abandonment were asked. 47% accepted that they had
embarked on project that was abandoned or rejected before. The reasons for
of government and the use of incompetent hands. The fact still remains. If
proper study was carried out it would have solved most of the problem listed as
respondents answered. 60% of the respondents answered "Yes" while the rest
40% said "No" The fact is, business that doesn't prepare feasibility study
before the beginning of the business may not be standing on a solid foundation.
It may need the study as the business proceeds in order raise more funds to
expand the business. As the business proceeds, the need for expansion and
need for more h d s will arise which will call for feasibility study.
Talking about the area of feasibility study that is most important in the
24% picked Managerial aspect and 18% picked Technical aspect. From the
above result, the financial aspect took the highest percentage. This proved the
fact that majority of the business in Nigeria need more fund to survive.
The last aspect of the research question which is relevant to this discussion is a
provided, 33% picked the cost of the study, 27% picked lack of awareness,
22% picked illiteracy and 18% picked presence of small scale business. The
fact here is, those who know the important of feasibility study are running away
from the cost. That was why m y project were not completed or rejected
This chapter deals with the summary of all the previous chapters in thls write-
up. Its aim is to give a compacted view of the whole project in its most brief
manner.
Feasibility studies of four companies were analysed, many related books and
journals were consulted. The summary of findmgs are now presented as follow;
The first chapter introduced the study. This chapter gave the /
the background to the study. Nearly all business project decision entail
business project based on the analysis of the project's merit and demerit.
The problem that can limit the use of the feasibility study were identified as
(iv) The use of quack or dubious consultant for the study was stated as
feasibility study. The main objective of the study was stated as been the
that if the idea for the new business venture is practicable, a good
business venture.
Three hypothesis on which the whole feasibility study was based were stated
as;
feasibility study.
The introduction chapter also shows the partial that will benefit from the
The focus of the introduction chapter is to show the reader what the whole
and other research work were contacted for review. The review was conducted
these phrases, we can see that by definition, feasibility study shows in practical
The third heading shows the stages leadmg to the development of a feasibility
the purpose for which it is been prepared. it has to pass through some stages or
phases . Authors looked at the stages in different ways but what is common
86
to Authors is that there are some activities to be carried out before the
feasibility study will show whether to continue or not. The important of these
feasibility study. Depending on the way Authors look at it the factors are
differently presented. What it involve is that all feasibility study must be based
The fifth heading talked about computer feasibility study. Computer project is
Here the feasibility study involve the establishment of objectives, selecting the
prospectus is just like feasibility study except it point of view has a built in
The last heading of the literature review chapter explained who will conduct the
Some Authors gave four ways in which the study can be handled. They are the
and project duector. the main point here is that feasibility study should be
study.
Chapter 3 described the methodology used for the project. The introduction
part described the two types of data used. They are secondary and primary
data. For the purpose of thls research work, survey research method was used.
This made use of Questionnaires and interview to collect data. Sources of data
sampling method was used. This mean out of fifty different organisations that
made use of feasibility study only five were selected as representation of the
rest. The result obtained fiom the five organisation covers the rest
standardized interview. The interview carried 60%. The tools for data analysis
Aero Merchant Bank, was considered not to be feasible, so, it can not be
established inspite of the money spent on the preparation of the study for its
based on the study prepared. Funds were sourced for it establishment. The
remaining projects were on-going project prepared for expansion. They were
able to be expanded as a result of the feasibility study prepared for the purpose.
Chapter five discussed the results of the data presented and analysed. From
facts gathered so far, it has been established that feasibility study do not only
operations are expedient. The study go fwther to identifj. those actions that if
taken or followed, will help assure success of new business venture or the
If the idea for the new business venture is practicable, a good feasibility study
necessary for firms and institutions which want to expand old lines or start new
production lines.
6.2 CONCLUSION:
measured in terms of their financial efficiency than in any other measure, index
properly, efficiency and effectively planned and operated with respect to its
It is pertinent to note that feasibility is useful both in private and public sector
of the economy. To the private sector the major objectives of feasibility study
is the determination of the average rate of return on investment (ROI) over the
years. In public sector, because the projects must be acceptable to one or more
such as savings on foreign exchange, use of local raw material, use of local
91
labour, social benefits and contributions to national defense. One term used for
to select that project which makes the greatest contribution to the economy.
Nigeria both private and public sector must take feasibility study serious before
6.3 RECOMMENDATIONS
decision process. So, I recommend this method for both private and public
sectors. Resources to execute all project are not always available in large
quantity, therefore there is need to use the little one available judiciously.
92
The best way to identify those projects that add most to the present and future
a feasibility study. There must be a way to determine how to get the greatest
return fi-om limited resources available, and subsequently plan and organise for
agriculture, industry'or government in such a way that its potential profit and
BOOKS
Publishers, 1995)
Ltd, 1994)
Inc, 1997)
QUESTIONNAIRE
INTRODUCTION:
the information supplied will be treated with utmost confidentiality and shall be
Please Mark ( * ) in the answers provided where applicable and lor give
5. EDUCATIONAL BACKGROUND
6. NATURE OF ORGANISATION BUSINESS: (BANKTNG)
(MANUFACTURING)
and Auditing)
7. NATIONALITY:
8. Have you ever make use of feasibility study in carrying out any project
organisation.
project.
15. Based on the nature of your organisation business, do you believe that
feasibility study is important in the achievement of your project
16. If your answer to (15) is (NO) please give only one point that you think
is very important in the achievement of project objectives.
17. Have your organisation ovex embarks on project that was abandoned or i
rejected
(a) Yes (b) NO 0
18. What do you think led to the project abandonment?
19. Do you believe that lack of feasibility study can lead to project failure
20. How do your organisation handle the technical aspect of your business
different location. [7
23. Inspite of the enormous benefit derived from the preparation of
(c) Illiteracy