Feasibility Study Notes PDF

**FEASIBILITY STUDY** - - - - **3 MAIN AREAS OF THE BUSINESS FEASIBILITY STUDY (MTF)** 1. 2. 3. **LEVELS OF FEASIBILITY ASSESSMENT (OTE)** an idea is conducted at three levels - **-** Will it work? - **-** Can it be built? - **-** Will it make economic sense if it works an...

**FEASIBILITY STUDY** - - - - **3 MAIN AREAS OF THE BUSINESS FEASIBILITY STUDY (MTF)** 1. 2. 3. **LEVELS OF FEASIBILITY ASSESSMENT (OTE)** an idea is conducted at three levels - **-** Will it work? - **-** Can it be built? - **-** Will it make economic sense if it works and is built? Will it generate **PROFITS**? **WHY DO A FEASIBILITY STUDY?** - - - - - - - - - - **GOALS OF THE FEASIBILITY STUDY** - - - - - - - **DATA SOURCES FOR A FEASIBILITY ASSESSMENT** - - \- Collection of primary data can be expensive and time consuming. - **STEPS FOR AN ECONOMIC FEASIBILITY STUDY** - - **FEASIBILITY STUDY** - **Business Feasibility criteria may be: (RCE)** - - - **Non-profits** - - **KEY BENEFITS OF A FEASIBILITY STUDY (IIPNIEAI)** - - - - - - - - **MARKET FEASIBILITY** - **- product, place, promotion, and price** - \- **target** different categories of **consumers** - **-** estimating the **total demand of the product** and the market share of the organization. - 1. - - - - - 2. - - - - - - - - - - - - **TECHNICAL FEASIBILITY -** Will it Work - - - - - - - - **FINANCIAL FEASIBILITY -** Does it Make Money - - - - - - - - **OPERATIONAL FEASIBILITY -** Will it work - - - - - - - - - - - **SEVEN STEPS OF FEASIBILITY STUDY (PPMFSRP)** 1. 2. 3. 4. 5. 6. 7. 1. **Preliminary Analysis** - - - - - This determines whether the feasibility study itself is justified - - - - 2. **Projected income statement (PCDUP)** - \- salaries, rent, gas, insurance, marketing, raw materials, maintenance, and the like - \- put your expenses and revenues into a cash flow projection. - \- projected shortfalls or financing needs - \- scenario planning - \- what if, cash revenues 3. **Market research or survey** - - - - - **4 types of search** 1. - - - - - 2. - - - - - - - - - - - - 3. - - - - - - - - - - - 4. - - - - - **4. Financial assessment including staffing** Risks involved with the project including costs such as: - - - - - - - - **5.Sensitivity analysis / Scenario Analysis** Sensitivity - change one variable at a time 1. 2. Scenario analysis - usually determines base case, worst case, and best case. 1. 2. **6. Review and Analysis** - - - - **7.Project Decision** (go or no-go) - - **"BUSINESS OPPORTUNITIES ARE LIKE BUSES.** **THERE'S ALWAYS ANOTHER ONE COMING."** **-** Richarch Branson **CONTENTS OF A FEASIBILITY STUDY (EDTPIMOSF)** 1. 2. 3. 4. 5. 6. 7. 8. 9. **AREAS OF FOCUS** +-----------------------------------+-----------------------------------+ | **MARKETING** | **FINANCE** | | | | | - Develop strategies to keep | - Obtain funding | | ahead of the competition | | | | | | - Capitalize on low-hanging | | | fruit | | +-----------------------------------+-----------------------------------+ **There are 4 Ps for a successful business** - - - - **PROJECT DEVELOPMENT AND MANAGEMENT/ FEASIBILITY STUDY** **WHAT IS A PROJECT?** - **Characteristics of** **Projects** - - IMG\_256 **PROJECT SUCCESS**  **PROJECT FAILURE** **What is Project Management** - - **TRIPLE CONSTRAINTS** **Time** **Cost Scope** **TRIPLE CONSTRAINTS** - - - **Key Areas of Project Management** - - - - - - - **Scope Management** - **Issue Management** - -  Rope not thick Issue\... already impacting the cost, time or quality **Cost Management** - This process is required to ensure the project is completed within the approved budget and includes: - - - - **Quality Management** - Quality Management is the process that insure the project will meet the needs \"conformance to requirements\" - **Crosby** \"fitness for use\" - **Juran** \"the totality of characteristics of an entity that bear on its ability to satisfy stated and implied need\' - **ISO 8402:1994** **Communications Management** - **Risk Management** - - Risk\... POTENTIAL negative impact to project Tree - location, accessibility, ownership Weather **Change Control Management** - - - - All changes require collaboration and buy in via the project sponsor\'s signature prior to implementation of the changes **PROJECT LIFE CYCLE** - - - - - - 1. **Initiation Phase** - - - - 2. **Definition Phase** - - - - 3. **Planning Phase** - - - - **Work Breakdown Structure** - - - 4. **Implementation Phase** - - - - 5. **Deployment Phase** - - - 6. **Closing Phase** - - - **PROJECT MANAGEMENT TOOLS** 1. **PERT CHART** - designed to analyze and represent the task involved in completing a given project. **2. GANTT CHART** - **Role of a Project Manager** **Process Responsibilities** - - - - - - **People Responsibilities** - - - - - **OVERVIEW OF PROJECT DEVELOPMENT AND PROJECT DEVELOPMENT CYCLE** **Business Development Framework** Project Defined: - - - - - **Three basic common attributes of a project** - - - **TYPES OF PROJECTS** **1**. a. **Quantifiable Projects** - benefits can be assessed in quantifiable term. Ex. Power generation b\. **Non-quantifiable Projects** - quantifiable assessment of benefits is not possible. Ex. Health, education 2. **Sectoral** Ex. Agriculture, mining, social services 3. **a. Profit oriented** Ex. New Projects/business Development Project (Expansion) Modernization or Technology b\. **Service Oriented** Ex. Welfare Projects, Educational **IMPORTANCE OF A PROJECT REPORT** 1. Serves as a master plan - indicate goals 2. Describes direction 3. Forsees requirements 4. Shows feasibility 5. Indicates profitability 6. Helps in decision making 7. Paves way to financial assistance 8. Ensures survival Precautions in Preparing a Project Report 1. Always estimate costs higher and income lower than expected. 2. Do not include any cost/price unless checked and verified in the market. 3. Make necessary provision for cost education if time gap between the preparation and implementation of the project is wide. **REASONS FOR THE FAILURE OF A PROJECT REPORT** 1. Failure to estimate the utilization capacity properly. 2. Not providing up-to-date information and supporting documents. 3. Not making adequate provisions for contingency. 4. Wrong selection of ownership form or not selecting an appropriate location. **BUSINESS DEVELOPMENT FRAMEWORK** 459174561\_492468110233591\_9117812011767082244\_n **IDENTIFICATION AND PROJECT PREPARATION** **PHASE 1. PROJECT IDENTIFICATION AND DEVELOPMENT** 1. **Identification and Prioritization** - - **Internal sources:** - - - **External sources:** - - - - - 2. **Feasibility Study/Business Plan and Appraisal** - Involves selection processes which are more detailed in nature as these include a concept paper or a feasibility study. If the project is found to be feasible, an appraisal of the project proposal for financing approval follows. 3. **Detailed designing** - **Phase II: Project Implementation** 1. **Activation/organization** - involve the recruitment/selection of the project manager and project staff 2. **Operational planning** - 3. **Implementation** - **PHASE III - TERMINATION/COMPLETION** 1. **Completion** - 2. **Termination** - **3. Handover** - **PHASE IV: EVALUATION AND RECYCLING** 1. **Project Evaluation** - Evaluation of results against the original project goals and objectives and the impact it has created to the environment 2. **Diffusion of Outputs** - Diffusion of lessons or outputs or services generated, as documented in a case report, or executive summary, or applied- study format or through extension of pilot or experiment 3. **Replanning/recycling** - replanning of project if it is to be duplicated or institutionalized into the parent organization **STAGES OF PROJECT LIFE** 1. **Pre-Investment Phase** a. b. c. 2. **Investment Phase** a. b. 3. **Post-investment Phase** a. b. **AREAS OF INVESTIGATION IN PROJECT/FEASIBILITY STUDY PREPARATION** **GENERAL FORMAT** A. **Preliminaries** - - - - - - - B. **The Main Body of the Report** I. **The Executive Summary** - - II. **Project Background and History** - - - - III. **Marketing Plan** - - - - - IV. **Organization and Management Plan** - - - V. **Production/Operations/Technical Plan** - - - - - - - VI. **Financial Plan** - - - - VII. **Socio-Economic Contributions** - - - VIII. **Project Timetable** IX. **References** X. **Curriculum Vitae** **MARKETING PLAN** **Market Description** - **Demand** - - **Supply** - - **SUPPLY MEASUREMENTS:** - - - **PROPOSED MARKETING PROGRAM** - - - - **PRODUCTION/OPERATIONS/ TECHNICAL PLAN** **Products** - - **Production process** - - - **Location** - **Project Layout** - **Equipments/Tools** - **Utilities** - **Raw Materials Requirements** - **Waste and Waste Disposal Methods** - - - **Total Production Costs** - **ORGANIZATION & MANAGEMENT PLAN** **Personnel** - - - - **Management Proposals** - - - **TERMINOLOGIES** **Job analysis** - **Job Descriptions** - **Job Specifications** - **Job classification** - **FINANCIAL PLAN** - - - - - - - - - - - - - - - - - - - - - - - - - - - - **SOCIO-ECONOMIC PLAN** - - - - **PROJECT IMPLEMENTATION & TIMETABLE** - - - -