The Feasibility StudyThe Feasibility Study The objective of a feasibility study is to find The objective of a feasibility study is to find

out if an project can be done and if so, howout if an project can be done and if so, how A feasibility study should tell management:A feasibility study should tell management:

Whether the project can be done;Whether the project can be done; What are alternative solutions?What are alternative solutions? What are the criteria for choosing among What are the criteria for choosing among

them?them? Is there a preferred alternative?Is there a preferred alternative?

After a feasibility study, management After a feasibility study, management makes a go/no-go decision.makes a go/no-go decision.

A feasibility study is a management-oriented activity

Dimensions of FeasibilityDimensions of Feasibility Operational FeasibilityOperational Feasibility Technical FeasibilityTechnical Feasibility Economic FeasibilityEconomic Feasibility Schedule FeasibilitySchedule Feasibility

Operational FeasibilityOperational Feasibility Operational -- how will the solution Operational -- how will the solution

work?work? Urgency of the problem and the Urgency of the problem and the

acceptability of any solution:acceptability of any solution: Human and social issues…Human and social issues…

Manager resistance?Manager resistance? Organizational conflicts and policies?Organizational conflicts and policies? Social acceptability?Social acceptability? Legal aspects and government regulations?Legal aspects and government regulations?

Technical feasibilityTechnical feasibility Is the project possible with current Is the project possible with current

technology?technology? How much technical risk is there?How much technical risk is there?

Does the technology exist at all?Does the technology exist at all? Is it available locally?Is it available locally? Can it be obtained?Can it be obtained? Will it be compatible with other systems?Will it be compatible with other systems?

Economic FeasibilityEconomic Feasibility Economic -- return on investmentEconomic -- return on investment

Is the project possible under given Is the project possible under given resource constraints?resource constraints?

What benefits will result from the system?What benefits will result from the system? Both tangible and intangible benefitsBoth tangible and intangible benefits Quantify them!Quantify them!

What are the development and What are the development and operational costs?operational costs?

Are the benefits worth the costs?Are the benefits worth the costs?

Schedule FeasibilitySchedule Feasibility Schedule -- can the project be Schedule -- can the project be

completed on time?completed on time? Is it possible to build a solution in time Is it possible to build a solution in time

to be usefulto be useful

Constraints may be hard or soft

Economic FeasibilityEconomic Feasibility The bottom line for many projects!The bottom line for many projects! Economic feasibility amounts to Economic feasibility amounts to

judging whether possible benefits of judging whether possible benefits of the project are worthwhile.the project are worthwhile.

As soon as a specific solution has been As soon as a specific solution has been identified, the analyst can weigh the identified, the analyst can weigh the costs and benefits of each alternative.costs and benefits of each alternative.

This is called This is called cost-benefit analysiscost-benefit analysis..

Cost/Benefit AnalysisCost/Benefit Analysis The purpose of a cost/benefit analysis is to The purpose of a cost/benefit analysis is to

answer questions such as:answer questions such as: Is the project justified (benefits outweigh costs)?Is the project justified (benefits outweigh costs)? Can the project be done, within cost constraints?Can the project be done, within cost constraints? What is the minimal cost to do a certain project?What is the minimal cost to do a certain project? Difficulties -- discovering and assessing benefits Difficulties -- discovering and assessing benefits

and costs; they can both be intangible, hidden and costs; they can both be intangible, hidden and/or hard to estimate, it's also hard to rank and/or hard to estimate, it's also hard to rank multi-criteria alternativesmulti-criteria alternatives

Types of BenefitsTypes of Benefits Benefits may be classified into one of the Benefits may be classified into one of the

following categories:following categories: Monetary Monetary -- when Rupee values can be -- when Rupee values can be

calculated;calculated; Tangible Tangible (Quantified) -- when benefits can be (Quantified) -- when benefits can be

quantified, but monetary values can't be quantified, but monetary values can't be calculated;calculated;

Intangible Intangible -- when neither of the above applies.-- when neither of the above applies. How to identify benefits? By organizational How to identify benefits? By organizational

level (operational, lower/middle/higher level (operational, lower/middle/higher management) or by department (production, management) or by department (production, purchasing, sales)purchasing, sales)

Types of CostsTypes of Costs Project-related costsProject-related costs

Development and purchasing costsDevelopment and purchasing costs Installation, training and conversion costsInstallation, training and conversion costs

Operational costs (on-going)Operational costs (on-going) Maintenance: hardware, software, facilitiesMaintenance: hardware, software, facilities Personnel: operation, maintenancePersonnel: operation, maintenance

For a small business that wants to introduce a PC-based For a small business that wants to introduce a PC-based information system, these cost categories amount to:information system, these cost categories amount to:

Project costs: purchase hardware, software, furniture; Project costs: purchase hardware, software, furniture; customize software, train, install, file conversioncustomize software, train, install, file conversion

On-going costs: operating the system (data entry, On-going costs: operating the system (data entry, backups, helping users, vendors etc.), maintenance backups, helping users, vendors etc.), maintenance (software) and user support, hardware and software (software) and user support, hardware and software maintenance, suppliesmaintenance, supplies

RiskRisk AnalysisAnalysis One of the criteria for comparing One of the criteria for comparing

alternatives often has to do with an alternatives often has to do with an evaluation of the risks for each alternative.evaluation of the risks for each alternative.

For example, one alternative may have a For example, one alternative may have a higher risk of rejection by users of the higher risk of rejection by users of the system.system.

Or, an alternative may have better backing Or, an alternative may have better backing from top management, which means that it from top management, which means that it has lower risk of failure because top has lower risk of failure because top management changed its mind.management changed its mind.

Risk Factors: A SampleRisk Factors: A Sample System requirements:System requirements:

Poorly understood requirements at Poorly understood requirements at scheduling time;scheduling time;

Customer changes requirements;Customer changes requirements; Is staff insisting on unnecessary features?Is staff insisting on unnecessary features?

Tools and technology:Tools and technology: Unsuitable target deployment environment;Unsuitable target deployment environment; Unsuitable development tools;Unsuitable development tools; New tools;New tools; No technology standardsNo technology standards

More Risk FactorsMore Risk Factors People:People:

Inadequate participation by users in Inadequate participation by users in development process;development process;

Poor project management;Poor project management; Poorly trained developers;Poorly trained developers;

Environment:Environment: Weak upper management commitment;Weak upper management commitment; Changing environment;Changing environment; Changing technological environment;Changing technological environment; Government actionGovernment action

Information AcquisitionInformation Acquisition There are many techniques for acquiring There are many techniques for acquiring

the information used in a feasibility study.the information used in a feasibility study. Study available documents and data;Study available documents and data; Sampling;Sampling; Interviews;Interviews; Questionnaires;Questionnaires; ObservationObservation SurveysSurveys

You need to know which method to choose, You need to know which method to choose, and how to actually use it.and how to actually use it.

Feasibility Study ReportFeasibility Study ReportContentsContents

Purpose and scope of the study -- Purpose and scope of the study -- objectives, who commissioned it, who objectives, who commissioned it, who did it, sources of information, process did it, sources of information, process used for the study, how long did it takeused for the study, how long did it take

Description of current situation -- Description of current situation -- organizational setting, current system(s)organizational setting, current system(s)

Related factors and constraintsRelated factors and constraints Problems and requirementsProblems and requirements Objectives of the new system Objectives of the new system

Feasibility Study Feasibility Study ContentsContents

Possible alternatives -- including, possibly, the Possible alternatives -- including, possibly, the present situationpresent situation

Criteria for comparison -- definition of the criteriaCriteria for comparison -- definition of the criteria Analysis of alternatives -- includes description of Analysis of alternatives -- includes description of

each alternative, evaluation with respect to each alternative, evaluation with respect to criteria, including cost/benefit analysis and criteria, including cost/benefit analysis and special implications.special implications.

Recommendations -- what is recommended, Recommendations -- what is recommended, implications, what to do next; sometimes it implications, what to do next; sometimes it makes sense to recommend an interim solution makes sense to recommend an interim solution and a permanent solution appendices that and a permanent solution appendices that include supporting materialinclude supporting material

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