ES 181 Engineering Economy - Chapter 9

ES 181 Engineering Economy - Chapter 9

• Chapter 9 covers the preparation of international standard feasibility studies, both manually and using software that adopts the IAS (presumably International Accounting Standards).
• The course plan for week 15 (6 hours) details topics related to preparing feasibility studies, using software, and adopting IAS.
• Topics include project summary, market feasibility, technical feasibility, financial feasibility, socio-economic feasibility, management feasibility, and appendices.
• Assessment tools include a quiz, course manual, PPT presentations, activities, and assignments.

Project (or Program)

• A project is any undertaking, completed individually or collaboratively, often involving research or design.
• It's carefully planned, typically by a project manager or project team, to achieve a specific goal.
• Projects are temporary endeavors, having a beginning and an end.
• They require a team, budget, schedule, and set of expectations to be met.
• Projects differ from ongoing organizational activities, concluding once their goals are met.

Project Summary

• A project summary is a project management tool.
• It summarizes a project's status at a specific point in time.
• It's concise and comprehensive, providing an overview of key project details.
• Internal summaries are used for project progress updates and communication among team members, managers, contractors, and other relevant parties.
• External summaries act as project briefs and help readers quickly grasp the project's nature, status, and overall context.
• Summarily, project summaries include basic information (project name, ID, phase, launch date, current date), key project team members, and details of the project's current phase and status.

Market Feasibility

• Marketing is essential to business success.
• Sales form a direct interface between customers and products offered by companies.
• Marketing acts as an indirect function connecting customers and companies.
• A market is a place where parties gather to facilitate the exchange of goods and services.
• Market feasibility studies help identify market competition, potential markets, and overall market analysis to assess a business idea.
• These studies are beneficial for individuals seeking to start a business.
• Target market refers to a group of customers towards whom a business directs its marketing efforts and merchandise.
• Market segmentation allows businesses to effectively target diverse consumer groups, each perceiving products and services differently.

Technical Feasibility

• Technical feasibility assesses the organization's technical capabilities and resources.
• It determines if technical resources meet the capacity for converting ideas into practical systems.
• Evaluation of hardware, software, and other technical requirements is crucial for a project.
• A technical feasibility study (TFS) provides a broad overview of project aspects.
• It assists with planning, troubleshooting, and tracking project progress.

Financial Feasibility

• Financial feasibility (FFS) determines if a project is potentially profitable.
• It involves financial and scenario analyses, and an investment appraisal.
• A cost-benefit analysis (CBA) through the entire project life cycle is included to determine profitability.
• It evaluates the viability of a project based on major components, such as the project's ability to generate enough cash to complete the project and make a profit.
• The bottom line for any business is sustainability, paying employees, and creating profit.
• Financial studies help assess these elements.

Socio-Economic Feasibility

• Socio-economic studies examine a project's contributions to the government and society.
• It demonstrates that business aims beyond profit, including the improvement of people's welfare.
• Socio-economics (social economics) studies how economic activities are shaped by and impact social processes.
• It analyzes societies by examining social, cultural, and economic attributes of the region or group under focus.

Management Feasibility

• Management feasibility assesses the objective and logical way to uncover strengths and weaknesses (also opportunities and threats) of an existing or proposed business venture.
• It also identifies the resources required for the project to be successful and helps answer the question of "should we proceed?" with the proposed project idea.
• A study of management feasibility contains two judging criteria: cost required and value to be attained.
• Four steps in a managerial feasibility method: Examine the market, Review technical requirements, Explore the business model, and Look for an escape route.

Appendices

• Appendices contain information too detailed for the main report, such as lengthy mathematical derivations, technical drawings, or raw data tables.
• Contents of appendices are summarized and referenced in the main body of the report.
• Each appendix has a label/number and title. All appendices are compiled together at the end of the document.