Feasibility Report

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 project

• 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 early.
• Provides documentation that the idea was
thoroughly investigated.
 Types of feasibility
• Operational feasibility

1. Useful for identifying operational problems to be solved,

and their urgency
2. The “PIECES” framework
– P-Performance ,I-Information, E-economy , C-control
– E-efficiency ,I-Information, S-services
 Types of feasibility

• Market Feasibility
1. Determine facility needs.
2. Suitability of production technology.
3. Availability and suitable of site.
4. Raw materials.
5. Other inputs
 Types of feasibility

• Financial/Economic Feasibility
1. Estimate the total capital requirements.
2. Estimate equity and credit needs.
3. Budget expected costs and returns

• Organizational/Managerial Feasibility
1. Business Structure
2. Business Founders

• Environmental feasibility
• Environmental impact and their assessment
 Types of feasibility
• Legal feasibility
1. Is the project legally feasible?
2. Legal requirements.
 Feasibility report
• 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
1. Introduction/Executive Summary
2. Background
3. outline of project
4. Methodology/method of analysis
5. Overview of alternatives
6. Conclusion
7. Recommendation
 Introduction/Executive summary
1. It states the 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 conducted
4. Executive summary:
• This should concise summary of the major
recommendations of the report within 6 pages so that
it quickly understood by senior executive
 Background

• 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 money).
• 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.
 Methodology
• 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
• or
• ROI = Net Present value / Estimated lifetime costs
 SWOT Analysis :-

• STRENGTHS
• WEAKNESS
• MAINTAINING THESE STREGTHS

• What can do for maintain these strengths?

• OVERCOMING THESE WEAKNESS

• What should I do to overcome these weakness?

• OPPORTUNITIES
• THREATS
• TAKING ADVANTAGE OF THESE OPPORTUNITIES

• What can I do to take the advantage of these opportunities?

• OVERCOMING THREATS

• What can i do to overcome these threats?

 Overview of alternatives
• Possible alternatives
• “Sticking with the current system” should always be studied as
one alternative
• 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
1. cost reductions
2. error reductions
3. increased throughput
4. increased flexibility of operation
5. improved operation
6. better (e.g., more accurate) and more timely information.
• Types of costs
Development costs purchasing cost, Installation cost,
operational cost
 Conclusion
• 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 on.

• It must untangle all the conflicting conclusions

and somehow reach the final conclusion, which is
the one that states which is the best choice
 Recommendation
• 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
recommendation emphatically.

• The basis for that judgment has to be stated

somewhere in the requirements section.
Example of feasibility report on Waste
• water system
 Feasibility Report
 Executive Summary
Includes
principal / salient features of technical, financial
and
– administrative aspects of the project

 Introduction
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)
 Project area
 geographic, topographic, climatic, religious, cultural
 descriptions
 Population pattern
 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
 housing conditions
 data on education, literacy, unemployment etc.
•
 Available water resources
• adequacy of surface and ground water w.r.t quantity and
– quality
• 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
• new
• deficiencies of existing system
 Proposed project (water supply scheme outline)
 Details of the project
 rehabilitation of the existing facility
 construction of new facility
 alternative designs
 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
 location maps
 technical information
 engg. design & drawings
 Implementation schedule (CPM/PERT)
 Cost Estimates
 capital investment (for all components)
 recurring cost (annual)
 Impact on the environment
 Institutional responsibilities (Identification of organizations)
 approval
 funding
 implementation
 O&M
Financial plan
Source of fund
Interest on loan
Recurring expenses
Annual burden
Conclusion
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
Recommendation
Specify all action for completion
Mention of detailed investigation, data collection
and operational studies