COLLEGE OF E N GI N E ERI N G ROO R KEE

Established in 1998

Lecture: 7
ASSESSMENT OF FEASIBILITY AND VIABILITY

Department of Electrical Engineering

 If you are starting a business, planning an investment on a project, it
is necessary that you determine it is viable or even just feasible for
that manner.
Knowing the feasibility and viability of a business venture will help its
sustainability and the success of the project or business.
FEASIBILITY
 
“Feasibility” is a study that aims at uncovering the strength and
weakness of an existing business or a proposed business venture. It
takes into consideration the opportunities offered by the environment,
its resources, and the subsequent success of the venture.
It should include the description of the product or service, its
historical background, operational details, financial data and
accounting statement, legal and tax requirement and its policies on
management and marketing research.

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 FEASIBILITY STUDY
 
Aim of a feasibility study
 
 Development objective
 Policy framework and detailed project objectives
 Technical soundness of the project
 Administrative feasibility of the project
 The economic and financial viability of the project proposal
 Other important policies and cross cutting issue

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 MARKETING FEASIBILITY
 
Marketing appraisal is concerned with determination of the
aggregate demand for the proposed product/service.
To carry out the market appraisal, the analyst requires variety of
information.
•   Who is the customer for the product?
• Where he is located?
• How can I reach them?
• What is expected sale for next 5 or 10 years?
 The information requirements are
• Past and present consumption and demand pattern
and likely projected trend
• Demand supply gap
• Production capacity and price structure
• Method of distribution
• Consumer behavior, motivations, tastes and preferences
• Competitors
• Government policy and restriction
• Supplementary and complementary goods
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 The information required for demand market analysis is partly
through market survey and partly from secondary sources.

TECHNICAL FEASIBILITY

Technical analysis of project is done continually when the project is

formulated.
Technical appraisal seeks to determine whether the pre- requisite for
the successful commissioning of project have been considered and
reasonably good choice have been made with respect to location, size
and process etc.
It also helps to locate source of supplier of raw material and fixing up
the final cost of project.
The major aspect of technical appraisal should include
a)  Choice of technology which is influenced by various factors such as- plant
capacity, principle inputs product mix, ease of absorption.
b) Means of acquiring technology – this is the option available are-this the
option available are-technology licensing, purchase of technology, joint
venture or collaboration arrangement.
c) Product mix design

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 d) Plant capacity decision the factors like demand, technological
requirements, inputs constraints, government policy and
resources of firm
e) Decision regarding structure and civil works.
 Considerations of alternatives – the technical analysis are a pre- requisite
establishing feasibility

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 FINANCIAL FEASIBILITY
 
Financial appraisal analyses whether proposed project will be
financially viable in the sense that is able to meet the burden of
servicing the debts and whether the project will satisfy the return
expectation of those who have invested capital.
The various aspects of financial appraisal are:-
 
1. Cost of project
2. Means of finance
3. Profitability and break-even point
4. Financial statement
5. Criteria for evaluation of projects
6. Risk analysis

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 ECONOMICAL FEASIBILITY
 
Economical feasibility is considered to be social cost benefits analysis.
 
It is the most frequently used method for evaluating the
effectiveness of a new system.
In economic analysis the procedure to determine the benefits
and savings that are expected from a candidate system and
compare them with cost.
An entrepreneur must accurately weigh the cost verses benefits
before taking an action.
Possible question raised in economical feasibility analysis are:-
A. Is the system cost effective?
B. Do benefits outweigh costs?
C. Estimated cost of hardware
D. Estimated cost of software/hardware development
E. Cost of employee time for study
F. Selection among alternatives financing
arrangements(rent/lease/purchase)
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 The concerned business must be able to see the value of
investment it is pondering before committing to an entire a
system study.
Economic analysis is used for evaluating the effectiveness of the
proposed system.
The economical feasibility will review the expected cost to see if they
are in-line with the projected budget or if the project has an
acceptable return on investment.

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 VIABILITY
 
Viability means: - ability to survive

“Viability” is the practical potential of a start-up business idea

to survive and grow in the marketplace.
“Viability” is the study or an investigation of existing business or
proposed venture’s sustainability. It determines whether the
proposal should be approved or not. It involves dealing with
strategies on how to make the business grow and last. Business
growth is an aspect of viability. How long a business will last is a
determined by its viability, and it can be seen in the profits that
the business has made for a certain period.

Good profit means a better chance at success for the

business. Viability into future is known as “sustainability”.

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 Business viability decision making is the study of identifying and

choosing alternatives business models based on the values and

preferences of the decision maker. Making a business decision

implies that there are alternatives commercial factors to be

identify as many of these alternatives as possible, but to choose

the one that best fits with the business venture goals and

entrepreneurial objective.

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 MARKET VIABILITY
• Market environment
Example- size, sustainability, potential marked, target market,

potential value.
• Competitors
• Similar products
• Pricing
• Packaging
• Distribution to market
• Promotion / advertising

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