Chap 7

Feasibility Study
1. What is the importance of feasibility study?
The importance of feasibility study is to determine whether a project has
a reasonable chance of success.
*When are all project feasible?
- No tight budgetary & time constraints

2. Explain Feasibility Study.

Feasibility study examines operational, economic, technical &
schedule factors.
Operational feasibility
It is a process of accessing the degree to which a proposed system
solves business problems or takes advantage of business
opportunity.
It also refers to a system that users will accept and use effectively
to support business objectives.
The PIECES framework can help identify operational problems to be
solved and their urgency.
-PIECES:
Control
Efficiency
Services
Performance
Information
Economy
Eg: Will it be easy to learn and use?

Economic feasibility
Economic feasibility consists of 2 tests which are Cost Analysis &
Benefit Analysis.
Cost-benefit analysis is the process of identifying the financial
benefits & costs associated with a development project.
It is performed when conducting a preliminary investigation,
evaluating a project & making recommendations to management.

The cost classification can be divided by

Tangible Cost

Costs whose dollar can be calculated

easily
Eg: employee salaries,
hardware/software purchases, office

Intangible Cost

supplies.
Cost whose dollar cannot be calculated
easily.
Eg: Customer dissatisfaction, lowered

employee morale, reduced information

Direct Cost

availability
Cost that can be associated with the

Indirect Cost

development of a specific system.

Eg: Salaries of project team members
Cost that cnt be attributed to the
development of a specific system/

overhead expenses.
Eg: Salaries of network administrators,
copy machine rentals, insurance
Fixed Cost

expenses
Costs that are relatively constant and
do not depend on a level of activity or

Variable Cost

effort.
Eg: Salaries, hardware rentals
Costs that vary depending on the level
of activity.
Eg: Printer paper, supplies, telephone

Development Cost

line charges
Costs that are incurred only once at the
time the system is developed or
acquired.
Eg: Development, software purchases,

Operational Cost

initial user training

Costs that are incurred after the
system is implemented and continue
while system is in use.
Eg: System maintenance, ongoing
training, annual software license fee

The benefit classifications: Tangible/Intangible; Direct/Indirect;

Fixed/Variable; Development/Operational benefits.
Positive benefits = benefits that are direct result of new
information system. Eg: increased revenues, improved services,
better management
Cost avoidance benefits = expenses that would be necessary if
the new system is not installed. Eg: Handling work w/ current
staff instead of hiring, Not having to replace hardware/software

Technical feasibility
It is a process of determining whether the organization has the
technology resources to develop or to purchase, install and operate
the system.
Eg: Do we have the technology resources?

Schedule Feasibility
The process of assessing the degree to which the potential time
frame and completion dates for all major activities within a project
meet organizational deadlines and constraints for affecting change.
Eg: Can we do it on time?