SHRINIVAS B. KOREWAR (ROLL NO:5)
ABHIJEET B. BHOSALE(ROLL NO:14)
What is feasibility study?
• A feasibility study is an analysis of the viability of an idea through a
disciplined and documented process of thinking through the idea from
its logical beginning to its logical end.
• Feasibility study is carried out in order to assess the viability of a new
• It is primary and most important thing in development of a project
Reasons to Do a Study
• Gives focus to the project.
• Narrows the business alternatives.
• Identifies new opportunities.
• Identifies reasons not to proceed.
• Provides valuable information for “go/no go” decision.
• Increases probability of business success by identifying weaknesses
• Provides documentation that the idea was thoroughly investigated.
Types of feasibility
• Operational feasibility
1. Useful for identifying operational problems to be solved, and their
2. The “PIECES” framework
P-Performance ,I-Information, E-economy , C-control
E-efficiency ,I-Information, S-services
Types of feasibility
• Market Feasibility
Determine facility needs.
Suitability of production technology.
Availability and suitable of site.
Types of feasibility
Estimate the total capital requirements.
Estimate equity and credit needs.
Budget expected costs and returns
• Organizational/Managerial Feasibility
1. Business Structure
2. Business Founders
Environmental impact and their assessment
Types of feasibility
• Legal feasibility
1. Is the project legally feasible?
2. Legal requirements.
• A feasibility report is the results of a feasibility study. This report
details whether or not a project should be undertaken and the reasons
for that decision.
• Report Content
outline of project
Methodology/method of analysis
Overview of alternatives
1. It state objective of the report and of the project
2. It should refer terms of references
3. Also it should state the constraints within which it has been
4. Executive summary:
This should concise summary of the major recommendations of
the report within 6 pages so that it quickly understood by senior
• Some feasibility reports may require some background discussion
in order to make the rest of the report meaningful to readers.
• Describe your proposed plan in sufficient detail state if it worked
elsewhere and how it was implemented
• Background on the Situation. For many feasibility reports, you'll
need to discuss the problem, need, or opportunity that has
brought about this report.
Outline of system
• Outline of system involves description of project
• List type and quality of product(s) or service(s) to be marketed.
• Outline the general business model (ie. how the business will make
• Include the technical processes, size, location, and kind of inputs.
• Specify the time horizon from the time the project is initiated until it is
up and running at capacity.
• It involves discussion on method of analysis for feasibility study
• Return on Investment (ROI) analysis
For comparing overall profitability
ROI = Estimated lifetime benefits - Estimated lifetime costs
Estimated lifetime costs
ROI = Net Present value / Estimated lifetime costs
SWOT Analysis :STRENGTHS
MAINTAINING THESE STREGTHS
OVERCOMING THESE WEAKNESS
What can do for maintain these
What should I do to overcome these
TAKING ADVANTAGE OF THESE
What can I do to take the advantage of
What can i do to overcome these threats?
Overview of alternatives
• Possible alternatives
• “Sticking with the current system” should always be studied as one
• Different business processes for solving the problems
• Different levels/types of computerization for the solutions
• Advantages and disadvantages of the alternatives
• The major possible alternatives should be discussed and compared
using clearly defined criteria.
1. Estimate Equity and Credit Needs
• Identify alternative equity sources and capital availability
Producers, Local Investors, Angel Investors, Venture Capitalists
• Identify and assess alternative credit sources.
Banks, Government (direct loans or loan guarantees), Grants,
Local and State Economic Development Incentives.
• Assess expected financing needs and alternative sources.
Interest Rates, Terms, Conditions, Etc.
2. Cost and benefits evaluation
• It demonstrate how this proposal is feasible
• It involves discussion technological feasibility, economic
practicality, social desirability, and ecological soundness
Examples of benefits
increased flexibility of operation
better (e.g., more accurate) and more timely information.
• Types of costs
Development costs purchasing cost, Installation cost, operational
• The conclusions section of a feasibility is the restatement of the
conclusions you have already reached in the comparison sections. In
this section, you restate the individual conclusions, for example, which
model had the best price, which had the best battery function, and so
• It must untangle all the conflicting conclusions and somehow reach
the final conclusion, which is the one that states which is the best
• The final section of feasibility reports states the recommendation.
• The recommendation section should echo the most important
conclusions leading to the recommendation and then state the
• the basis for that judgment has to be stated somewhere in the
Example of feasibility report on Waste
principal / salient features of technical, financial and
administrative aspects of the project
project genesis – how idea of project originated?
- whether fits in development plan?
organization of study
scope and status of report
Project area and need for the project(background)
geographic, topographic, climatic, religious, cultural
estimation and analyze growth rate
estimate probable density of population
Economic and Social conditions
present living standards of various groups
identification of locations according to income levels
data on education, literacy, unemployment etc.
Available water resources
• adequacy of surface and ground water w.r.t quantity and
• development of water resources
• pollution problems
Existing water supply system
• details (source, capacity, area served, hours of supply,
number of connections, rate etc.) of existing system
Existing drainage and solid waste systems
Need for a project
• improvement, expansion
• deficiencies of existing system
Proposed project (water supply scheme outline)
Details of the project
rehabilitation of the existing facility
construction of new facility
selection of sources
alternative layouts of rising mains
alternative sites of WTP & ESRs
training schemes for O & M
consultancy services needed
Components of project
thoroughly described with necessary topo- maps
engg. design & drawings
Implementation schedule (CPM/PERT)
capital investment (for all components)
recurring cost (annual)
Impact on the environment
Institutional responsibilities (Identification of organizations)
Source of fund
Interest on loan
Summary of findings and results of FR
Review of need
Recommended alternative scope, coverage and components
Capital cost and tentative financing plan
Urgency for implementation
Specify all action for completion
Mention of detailed investigation, data collection and operational studies
1.P-Performance E-efficiency I-Information S-servicesE-economyC-control2.Determine facility needs.Suitability of production technology.Availability and suitable of site.Raw materials.Other inputs.. Market Industry description. Industry competitiveness.Market potentialAccess to market outlets. Sales projection
Are there any legal requirements or issues we need to look at or attend to?Do we need a special shareholders agreement?What warranties will be required?Can we afford to meet these warranty obligations?Will we need to address any Trade Practices Act requirements?Are there any special insurance requirements?Are there any special licences we need to look at or obtain?Do we require any special contracts or is there a need to raise anycontracts or contractual issues?
In feasibility report the headings may differ but overall content will be same
for example, a discussion of power and speed of laptop computers is going to necessitate some discussion of RAM, megahertz, and processors.
Solution with the highest ROI is the best alternative - But need to know payback period too to get the full picture - E.g. A lower ROI with earlier payback may be preferable in some circumstances
If possible numerical weighting for each criteria should beestabilished
Examples of benefits cost reductionserror reductionsincreased throughputincreased flexibility of operationimproved operationbetter (e.g., more accurate) and more timely information.Types of cost Development costs purchasing cost, Installation cost, oprerational cost
Now let us see example on feasibility report, we will discuss example on project of installation of water supply line