Architectural projects

feasiblity study
Lecture one : Introduction
By
Mekuanint A
 • A feasibility study is the process that every person or
company should do before starting any project.

• A well prepared and researched study could save

hundreds of thousands of dollars/Birrs further down
the road.

what is • Feasibility study conducted at the project initiation

feasiblity phase before significant expense are engaged.

study???? • is a formal study that attempts to answer one

main question :
Whether the project i s Feasible OR Not

• is a process of determining viablity of an idea, project

workablity such as legally, technically, economically etc
Benefits of • To uncover new ideas that could completely change a
conducting a projects scope

feasiblity • To gives a clear picture of the proposed Projects

study..... • Improves project teams focus

• Identifies new oportunities
• Porvides valuable information for a go/no-go decision
• Narrows the business alternatives
• Identifies a valid reason to undertake the project
• Enhances the success rate by evaluating multiple
parametres
• Aids decision-making on the project
 Team Vs One

• Not a single person can conduct a feasibility study alone , feasibility

study is a product of a team of experts, can perform a set of studies
(legal, market, financial, profitability, technical, environmental, social,
national, regional, international ...Etc.).
• The feasibility study takes a long time, efforts and cost.
 • Is any economic and financial action by an
individual or group of individuals, or by on behalf
of the State to meet market needs for the purpose
of profitability.
Project
project
definition
types

private public joint venture

projects projects projects
 What is project cycle
Is the process of the project has to go from the beginning of idea start up to the
implementation and testing operation.
The five phases of project cycle
I. Identification: Preliminary idea creation, pre-feasibility studies, ( identify the
phenomena ).

II. Deliberation: conducting feasibility studies, decision to proceed with the project.

III. Implementation: business plan, Securing capital, construction, obtaining permits,

hiring management.

IV. Operation: Mobilization of manpower, equipment and materials to carry out the plan.

V. Evaluation: Determining what worked and did not work (in preparation to plan again).
 • Owner : a person who has character of bravery,
superiority, model in taking risk by his ability.
Concepts and • Entrepreneur: is a person shall create and realize the
definitions of some idea that will be implemented,

terminology.... • Entrepreneurship: i s th e p r o c e s s o f c r e a t i n g
something new, or make changing to the old one, that
called as (innovation) with purpose in raising
individual and community prosperitY.

• Investment: Mobilizing or using part of wealth of

individuals (capital) for the purpose of creating new
capacity in the community
 • Real investments: create new economic capacity such as creating
a new project
• Financial investments: invest in existed projects such as investing
in the secondary market of the financial markets.
Examples for real and financial investment

contiii.... Real investment Financial investment

• Building a new • Buying an existing
House constructed house
• Land reclamation • Purchase a piece of land
• Income: the money that a person or a company receives in the
continous cash flow exchange for their investment.
Net income = Return on the production process —total cost —taxation
—Interests —distributions.

personal income = dividends \ number of entrepreneurs.

• Wealth: Are the total monetary values of each property

movable and immovable for individuals

• Capital: is a part of wealth; Investor used to generate income

 Feasibility study Vs Business Plan

• FS should be conducted at • BP prepared for existed projects.

initiation phase,
• FS is filled with calculations,
analysis and estimated projections
of a business opportunity.
• FS is all about business idea
viability
• Fs is about identification of
function
• BP is made up of mostly tactics and
strategies to be implemented in other to
start and grow the business.
• BP deals with business growth plan and
sustainability.
• Bp is about planing function
 • Researches and studies.

• Magazines and publications

• General national statistics.

How to come up • idea discussion with family members
with an idea???? and friends.
• Making market analysis by observing

• Internet articles, blogs and social

media interaction.
 5 Dimensions of Technical feasiblity

feasiblity study. Market feasiblity

te
Financial feasiblity
Organization and mangement
Legal feasiblity
 • T h e technical Feasibility study is done b y
specialists and experts for judging the validity of
1.Technical
the technical aspects necessary to create the new
feasiblity project.
• Technical feasiblity is one of the first study that
must be conducted after the project has been
identified.
• It show the details how you will deliver a product
or service?
 Technical study includes
1. Manpower and Raw materials
• the availablity of experts and skillfull labor through out the project phase
• the availablity of raw materials ,processed materials
2. Technology and operational
• This involves questions such as whether the technology needed for the
system exists, how difficult it will be to build, and whether the firm has
enough experience using that technology.
3. location analysis.
• Location analysis typically involves testing geographic locations for project,
• proximity to infrasturucture(water,electric ,others)
• Is there the business Activity in the selected area/location
4. core function and facilities of the project
 Technical study includes
5. Machinery and equipement
• what type of machnery and equipement used to build your project
• Information about equipment suppliers
• who are the potential suppliers of the equipment?
• where they are located?
• what sort of services and warranites do they provide ?
6. Infrastuructural facilities
• the availablity of roads,railways ,air transportation, water ways,ports,etc
depending up on the requirement of the the project
 • Market study is the systematic gathering ,recording
and analysing of data about the problems relating to
2.Market
the market.
Feasiblity Methods of market research /study
• Field research
• Desk Research

Field Research Desk Research

• Personal and tephone • Internal sources
interview • online Research
• postal survay • Printed research
• purchase survay
what should be studied in Market analysis??

• A description of the market industry,

• Examine the main structure and characteristics of the
market.
• Historical analysis of supply and demand size (past and
present).
• The future market potential of the project
• Determine the potential customers etc.
• Market share estimate for your project.
• The market prices for the products (goods or services).
 Financial Feasibility: whether the proposed

2.Financial project is financiallly viable that able to meet the

burdens of serving Debit and that will satisfy the
Feasiblity
return expectation of the capital investment
It includes:
• how much start-up capital is needed,
• sources of capital/ means of financing
• returns on investment, etc.
4.Organization
& mangement • Defines the legal and corporate structure of the
feasiblity business (may also include professional
background information about the founders and
what skills they can contribute to the business).
 • a measure of how well a solution can be
5.Legal implemented within existing legal/ contractual
Feasiblity obligations.
• It includes concering contracts,liablity,violations
and other legal issue
• determine whether the proposed systems
conflicts with the legal requirements
 1. Outline your plan and perform a preliminary
analysis
2. Conduct a market survey or perform market
6 steps of analysis
conducting
3. Answer the core feasibility questions
feasibility study
4. Calculate the project costs
5. Polish and review your feasibility report
6. present your findings
step 1. Outline your plan and perform apreliminary analysis

• Outline the project idea

• Explain the importance of the business venture

• Describe the existing market landscape of project idea

• Describe the historical background of the project idea

• State any risks to delivering this project

step 2. Conduct a market survey or perform market analysis

• Understand the current market condition

• Identify customer demographics, top competitors, the

value of the market, and the potential share of the

market you can expect to earn.

step 3. Answer the core feasibility questions

• What’s the technical feasibility?

• What’s the economic/ Market feasibility?

• What’s the financial feasibility right now?

• Is this plan legal?

• What’s the organizational feasibility?

step 4. Calculate the project costs

• Where will the project’s budget come from?

• Can we afford to fail?
• What are all of the project costs we need to account
for?
• How much money will you need to complete the entire
project?
step 4. Calculate the project costs

Project cost is the total cost of all items required to

complete the project investement .

Two types of project cost

1. fixed investment cost

2. Operational costs
1. Fixed investment cost

Fixed investment cost is all fixed cost of elements

throughout the project implementation. It includes:
• land purchasing price.
•Land and site development
•building and Construction costs

•Purchasing price of machinery and

equipment,vehicles
2. Operational cost

Operational cost is the ongoing variable cost of

project. It includes :
• Raw materials cost
• Utilities fee: Electricity,water,land etc
• Adminstrative cost:Employee fee,Travel
expense,Repair and
maintenance,Insurance,Office
supplies,Miscellaneous expense: land rent,
telephone and postage, audit, legal and license
fees
step 5. Polish and review your feasibility report

• Are your findings clear?

• Are the answers reasonable?

• Are you providing the right amount of info?

• Are there any typos?

step 6. Present your findings

• It’s now time to present your feasibility analysis

and the results

• Be transparent and open about your findings.

• be proud to show it even if the response isn’t what

you’d hoped for.

 Archhitectural Project Feasiblity Study Report
General contents
Executive summary
1.Introduction
1.1. project background
1.2. project objective
1.2.1. general objective
1.2.2 specific objectives
1.3. project description
1.4.project rationale
1.5.significance of the project
2. Market study
2.1 general overview
2.2. market potentails
2.3.demand analysis
2.4.current supply
2.5.demand - supply gap
2.6. target customers
2.7. market promotion and strategy
3. Technical study
3.1.description of project services
3.1.1.land use plan
3.2.construction work and technology
3.2.1 architectural design and layout
3.2.2 structural design
3.3.3. reinforced concrete
3.3.4.foundation design
3.3. raw materials and utilities
3.4. Machnery,furniture and equipement
3.5. manpower requirement
3.6. land, building and civilworks
3.6.project implementation schedule
4. organization and mangment
4.1.organiational structure
4.2. management
contiii....
5. financial study
5.1. Total investment cost 6. conclusion and recommendation
5.1.1. fixed cost 6.1.conclusion
5.1.2. operational cost 6.2. recommendation
5.2. Project Capital and financing references
5.2.1. project capital Annex
5.2.2. project financing
5.3. depreciation and amortization
5.4. Total revenue
5.5 discounted payback period
5.6. cashflow statement
5.7. cost benefit ratio
5.8. Internal rate of Return
5.9. Net present Value