Ethiopian Civil Service University

College of Urban Development & Engineering

Feasibility Analysis

By : Goitom A. (PhD)

Week Five
 Feasibility Analysis
 Feasibility analysis is used to determine the viability of an idea, such
as ensuring a project is legally and technically feasible as well as
economically justifiable.
 It tells us whether a project is worth the investment—in some cases,
a project may not be doable.
 There can be many reasons for this, including requiring too many
resources, prevents those resources from performing other tasks and
also may cost more than an organization would earn back by taking
on a project that isn’t profitable.
 A well-designed study should offer a historical background of the
business or project, such as a description of the product or service,
accounting statements, details of operations and management,
marketing research and policies, financial data, legal requirements,
and tax obligations.
 Feasibility Analysis…Cont’d
 The objectives of a feasibility study are to find out if an information
system project can be done (...is it possible?...is it justified?) and to
suggest possible alternative solutions.
 A Feasibility Study should address issues that could influence the
success of a potential project and assess the advantages and
disadvantages of each option so they can be ranked.
 It includes a cost/benefit analysis and results in the development
of a Feasibility Report.
 The Feasibility Study should provide a good foundation to allow
early project analysis and design activities to commence in a
focused manner.
 The end product of the study should be a clear, concise feasibility
Report to senior management, which presents the proposed
project’s original specifications and objectives, with conclusions
and recommendations for the next phase.
 Feasibility Analysis…Cont’d
 This report should highlight the advantages and disadvantages
associated with each option and cover issues such as cost, revenue,
strategic considerations and other issues.
 It should provide senior management with a firm basis to
determine whether the project has sufficient merit to continue into
more detailed phases.
 It should especially highlight changes that may need to be made to
any existing Business Case due to the study.
 Feasibility study should narrow the range of options, assess each of
the remaining options and propose solutions to issues raised.
 In many ways, a Feasibility Study can be treated like a mini-project
in its own right; its outcome being a decision on how the larger
project should be managed.
 Generally, such studies precede technical development and project
implementation.
 Steps of Feasibility Study
 A Feasibility Study can be broken down into the following steps:
 Step 1 - Appoint an experienced manager and team, the membership
of which depends on the nature of the project. The team should
include a range of specialists, and should not be dominated by one
type of specialist.
 Step 2 - Examine the scope of the study to assess the work involved
and any constraints, such as quality, cost, time and so forth.
 Step 3 - Appoint external advisers to supplement team resources, if
required.
 Step 4 - Create a plan for the study. This plan might take the form of a
Project Proposal or work schedule, and should include a milestone
plan and assigned responsibilities.
 Step 5 - Set a timetable and budget for the study. The timetable and
budget should be sufficient to allow options to be explored and
thoroughly evaluated.
 Step 6 - Collect relevant information and write the Feasibility Report.
 Aspects of a Feasibility Report
What are the main aspects of a Feasibility Report?
Exploring the options - the first step of a feasibility Report
is to examine all possible options. Each option should be
thoroughly reviewed.
Ranking the options - the options identified should then be
ranked according to the sponsor’s goals, project constraints
and other external issues.
Outlining the way forward - the feasibility report should
result in a clear definition of future directions.
 Elements of Feasibility Study
 The following three main elements should be managed in relation to
the Feasibility Study:
 Organization - there should be a clearly focused, but flexible structure
built around the milestone plan. Roles and responsibilities should be
clearly defined and a responsibility chart or governance structure
model is one-way of doing this definition.
 Communication - the manager should maintain good contact with the
Project Sponsor to ensure the study remains on target and any
required changes are made. Internal team communication is also
important to ensure delays are tracked, duplication is avoided and
information is shared, especially between different areas of specialty.
 Control - the Manager should ensure milestones adopted are
appropriate for achieving the aims of the study and are reached on
time. Costs should also be monitored, and timing and budget changes
made so that the study still meets its aims.
 Feasibility Analysis…Cont’d
 The Feasibility Report should be submitted to the Business
Owner(s)/Senior Management to consider the options and
recommendations. The Business Owner(s) should then make a
decision regarding the future of the potential project and how the
project should be managed.
 A feasibility study should provide management with enough
information to decide:
 Whether the project can be done;
 Whether the final product will benefit its intended users;
 What are the alternatives among which a solution will be chosen
(during subsequent phases)?
 Is there a preferred alternative?
 Feasibility Analysis…Cont’d
 What to Study? ...What to Conclude?
 Things to be studied during the feasibility study phase:
 The present organizational system, including users, policies,
functions, objectives,...
 Problems with the present system (inconsistencies,
inadequacies in functionality, performance,...,)
 Objectives and other requirements for the new system (what
needs to change?)
 Constraints, including nonfunctional requirements on the
system (preliminary pass)
 Possible alternatives (the current system is always one of those)
 Advantages and disadvantages of the alternatives
 Feasibility Analysis…Cont’d
A feasibility analysis evaluates the project’s potential for
success; therefore, perceived objectivity is an essential
factor in the credibility of the study for potential investors
and lending institutions.
 There are five types of feasibility study—separate areas
that a feasibility study examines, described below:
1) Technical Feasibility
2) Economic Feasibility
3) Legal Feasibility
4) Operational Feasibility
5) Scheduling Feasibility
 Technical Feasibility
•This assessment focuses on the technical resources available to the
organization.
•It helps organizations determine whether the technical resources
meet capacity and whether the technical team is capable of
converting the ideas into working systems.
•Technical feasibility also involves evaluation of the hardware,
software, and other technical requirements of the proposed system.
•Some projects may not be technically feasible.
•Technical Feasibility Should consider the following issues:
•Is the project feasibility within the limits of current technology?
•Does the technology exist at all?
• Is the proposed technology or solution practical?
• Do we currently possess the necessary technology?
• How you intend to deliver a product or service to customers.
 Technical Feasibility…Cont’d
 Do we possess the necessary technical expertise, and is the
schedule reasonable?
 Is relevant technology mature enough to be easily applied to our
problem?
 Some firms like to use state-of-the-art technology, but most firms
prefer to use mature and proven technology.
 A mature technology has a larger customer base for obtaining
advice concerning problems and improvements.
 Assuming that required technology is practical, is it available in
the information systems shop?
 If the technology is available, does it have the capacity to handle
the solution.
 If the technology is not available, can it be acquired?
 Economic Feasibility
 This assessment typically involves a cost/ benefits analysis of the
project, helping organizations determine the viability, cost, and
benefits associated with a project before financial resources are
allocated.
 It also serves as an independent project assessment and enhances
project credibility—helping decision-makers determine the
positive economic benefits to the organization that the proposed
project will provide.
 Economic Feasibility Should consider the following issues:
 Is the project possible, given resource constraints?
 Are the benefits that will accrue from the new system worth the
costs?
 What are the savings that will result from the system, including
tangible and intangible ones?
 What are the development and operational costs?
 Economic Feasibility….Cont’d
 The bottom line in many projects is economic feasibility.
 During the early phases of the project, economic feasibility
analysis amounts to little more than judging whether the
possible benefits of solving the problem are worthwhile.
 As soon as specific requirements and solutions have been
identified, the analyst can weigh the costs and benefits of each
alternative.
 This is called a cost-benefit analysis.
 Legal Feasibility
This assessment investigates whether any aspect of
the proposed project conflicts with legal requirements
like zoning laws, data protection acts or social media
laws.
Let’s say an organization wants to construct a new
office building in a specific location. A feasibility study
might reveal the organization’s ideal location isn’t
zoned for that type of business.
That organization has just saved considerable time and
effort by learning that their project was not feasible
right from the beginning.
 Operational Feasibility
This assessment involves undertaking a study to analyze
and determine whether—and how well—the organization’s
needs can be met by completing the project.
Operational feasibility studies also examine how a project
plan satisfies the requirements identified in the
requirements analysis phase of system development.
Define the urgency of the problem and the acceptability of
any solution; If the system is developed, will it be used?
Includes people-oriented and social issues: internal issues,
such as manpower problems, labor objections, manager
resistance, organizational conflicts and policies; also
external issues, including social acceptability, legal aspects
and government regulations.
 Operational Feasibility

 The PIECES framework can help in identifying operational problems to be

solved, and their urgency:
 Performance -- Does current mode of operation provide adequate
throughput and response time?
 Information -- Does current mode provide end users and managers with
timely, pertinent, accurate and usefully formatted information?
 Economy -- Does current mode of operation provide cost-effective
information services to the business? Could there be a reduction in costs
and/or an increase in benefits?
 Control -- Does current mode of operation offer effective controls to
protect against fraud and to guarantee accuracy and security of data and
information?
 Efficiency -- Does current mode of operation make maximum use of
available resources, including people, time, flow of forms,...?
 Services -- Does current mode of operation provide reliable service? Is it
flexible and expandable?
Operational Feasibility….Cont’d
 Scheduling Feasibility
 This assessment is the most important for project success; after all, a
project will fail if not completed on time.
 In scheduling feasibility, an organization estimates how much time
the project will take to complete.
 Constraints on the project schedule and whether they could be
reasonably met.
 We may have the technology, but that doesn't mean we have the
skills required to properly apply that technology.
 True, all information systems professionals can learn new
technologies.
 However, that learning curve will impact the technical feasibility of
the project; specifically, it will impact the schedule.
 Given our technical expertise, are the project deadlines reasonable?
Some projects are initiated with specific deadlines.
 Scheduling Feasibility….Cont’d
 You need to determine whether the deadlines are mandatory or
desirable.
 If the deadlines are desirable rather than mandatory, the analyst
can propose alternative schedules.
 It is preferable (unless the deadline is absolutely mandatory) to
deliver a properly functioning information system two months
late than to deliver an error-prone, useless information system
on time!
 Missed schedules are bad, but inadequate systems are worse!
Thanks