Ce Project Feasibility you will be able to feasibility study of projects Edwin Land LEARNING OBJECTIVES market analysis (0 establish demand and market share for the deliverables | + Examine the rational fora social cost-benefit analysis and study the methodologies for conducting a social cost-benefit analysis = 3.1 INTRODUCTION fons of future returns. It is imperative that th justify th osts involved. Before a project is undertaken pudy’ examin ‘ability of a project from the fi ow. The financial profitability of the project involve apital outlays spread over time. An organization undertakes a project arkel narkg { ‘ oiroject Feasibility / 29 profits. The costs of the project depend on the technology used, the choice of which is often ed by th pacity requirements are dependent on the demand for the product, service or other deliverable that is the end result of the project, The feasibility study involves a market analysis, a technical analysis, a financial analysis, an environmental analysi = 3.2 MARKET ANALYSIS A market analysis aims to identify the need or the potential demand for the produet or service tying out a marke An informal interaction with customers. It is important to a “feel” of nd resulting from the project. The first step in nalysis is t0 g the market and the pro others gives a general “feel” of the market situ structure. We should examine seymentation may be income levels, education levels, age levels, sex, size of the family geographical division, and indus ‘0 determine the segment to b The nature of id should also be considered. The demand may be driven by: seasonal equirements, regiorial requirements, fashion and current trends, price, disposabl ind on. The ta ment and the nature of demand help us to determi fhe potential market. The potential market share can then be determined on the basis of our capacity and that of our competitors to fulfil the demand, Objectives for the study are spelt out in question form and can be grouped under the P’s of marketing, naiinely, product, price, place and promotion. Let us consider a firm that plans a project to set up a unit to manufacture domestic air-conditioners. The objectives for the sompetitors tify the mar e basis on which the market can be segmented. The basis of y or a combination of some of these factors. This will help market and demand analysis may: be expressed as follow: (a) Product ) Who are the buyers of air-conditioners? ly as well as seasonally)? iii) How is the demand distributed (geographi iv) What is the break-up of the demand (by sizes and models) (b) Price What price is the customer willing to pay i) What will be the cost of production? (©) Plac i) What should be the ? (ii) What should be the trade margins? | (@) Promotion (i) How can customers be convinced of the superiority’ of the air-conditioner over those produced by competitors i) How should the customers be made aware of the altributes of the product?30. \ Project Mana, ‘The objectives determine the information that is required to be collected. Information may be gathered from secondary and/or primary sources. Secondary information is information that has already been collected in some other context and is readily available, Primary information is collected for the first time and is specific to the study on hand. A study of secondary information reveals the gaps in the information required by us and helps us to design our market research and survey. Secondary information may be available internally within the organization. Data such as past trends of sales and so on are invariably available. Some data may have been collected for some other pu n be obtained from external soure: and Research Group (MARG) which rescarches various markets and provides standard and customized reports Centre for Monitoring Indian Economy (CMIE) which maintains specific industry databases and so on. Its available in the publications of trade associations like Federation of Indian Chambers of Commerce and Indu: 1) and through publications of various government research zations like the Central Statistical Organization and so on which publish reports such as sus report, government plan documents, statistical surveys, industry-specific publications and so on. However, secondary information must be carefully evaluated, Some of the issues that must be considered are as follows: (a) Purpose, What was the purpose of collecting the information? It is important to appreciate the purpose for which the information was collected. For instance, if we were to collect information about the requirements of air-conditioners from a study aimed at determining the preference of customers for air-conditioners vis-a-vis central -onditidning, the conclusions may be totally misplaced (b) Person. Who collected it? It is relevant to know who collected the information. This reflects the experience and the interest of the ‘researcher, which may be at cross purpose to our study (©) Method. How was it collected? The issue is relevant as the methodology of collectin the data can bring in biases in the data, For instance, if the data were collected through mailed questionnaires, then the number of non-respondents may not be reflected in the data and this may alter the conclusions drawn considerably (@) Time, When was it collected? This is an indicator of the currency of the data. If the data is t00 old or outdated, it may not serve our purpose. (©) Sample. All rescarch involves sampling. We draw inferences from the sample. It is necessary to know how the sample was determined both for its size and for its composition. How representative was it of the population group in which we are interested? Were some biases introduced in the sample? What is the degree of error that can be attributed to the sample? These issues can have far-reaching effect on our study Secondary data is easy to obtain and saves time. It is often more economical if obtained through public dom: sional research, Howev n agencies, and is sometimes more accurate as itis a result of prof the quality of data and the data collection process cannot be accurately ascertained by the uscr. Information, to be usefuul, must be relevant, accurate, timely, and obtained at reasonable cost survey. T considera inferences populatio The research manageny Dema They may (ature) = 3. Technical technolog and equigl lis experts, technical enterpris but the & decisions the comp and tech 3.3.1 § W, Skin made by 3.3.2 Technold organizali in-house the cost