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What is a Feasibility Study

Is this a good business idea?

Helps answer the question of whether to go forward with the business idea.

Feasibility Analysis
A measure of how beneficial or practical the development of a software system will be to an organization. This analysis recurs throughout the life cycle.

Feasibility Checkpoints
creeping commitment approach
Existing System

Planning

Planned Project

Support
Production System

Analysis

Business Requirements

Implementation

Technical Design

Design

Existing System

Planning

Planned Project

Support

Analysis

Production System

Business Requirements Implementation Design

Technical Design

Feasibility Checkpoints

systems analysis -- study


urgency? rough cost estimate

systems analysis -- definition


clearer scope, refined cost estimate

systems design -- selection


adjust scope, schedule, costs

systems design -- procurement


option check before letting contracts

systems design -- detail design


one last chance to cancel or downsize

What is a Feasibility Study


A feasibility study is valuable for: Starting a new business Expansion of an existing business Adding an enterprise to an existing business Purchasing an existing business

What is a Feasibility Study


A feasible business will:
Generate adequate cash flow and profits, Withstand risks, Remain viable in the long-term Meet the goals of the founders

What is a Feasibility Study


Evaluate Alternatives
The feasibility study helps to frame and flesh-out specific business scenarios so they can be studied in-depth.

What is a Feasibility Study


Pre-Feasibility Study
May help sort our alternatives and determine if a full-blown feasibility study is warranted.

What is a Feasibility Study


Market Assessment
A market assessment may be conducted first to identify market opportunities. If no opportunities exist, there may be no reason to proceed further.

What is a Feasibility Study


Study Results
Outline in depth the various business scenarios examined and the implications, strengths and weaknesses of each.

What is a Feasibility Study


Go/No Go Decision
The feasibility study will be a major information source in making this critical decision.

Reasons Not to do a Study


We already know it is feasible. We did a study a couple of years ago. Just a way for consultants to make money. The company selling us the equipment says it is feasible. Lets hire a general manager and have him do the study. Waste of time we need to buy the site and begin construction.

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.

Reasons to Do a Study
Provides documentation that the idea was thoroughly investigated. Helps attract funding from lenders, grant providers, etc. Helps attract equity investment

Not the Business Plan


Feasibility study conducted before decision to proceed (go/no go). Business plan prepared after decision to proceed (go/no go). Feasibility study provides investigative function. Business plan provides planning function.

Feasibility Study Outline


1.Feasibility Process 2.Economic Feasibility Study 3.Technical Feasibility Study 4.Behavioral Feasibility Study

1. Eight Steps in Feasibility Study


1. Form a project team and appoint a project leader 2. Prepare system Flowcharts 3. Enumerate potential candidate systems 4. Describe and identify characteristics of the candidate systems 5. Determine and evaluate performance and cost effectiveness of each candidate system 6. Weight system performance and cost data 7. Select the best candidate system 8. Prepare and report directive to management

2. Economic Feasibility Study


The purpose of an economic feasibility study (EFS) is to demonstrate the net benefit of a proposed project for accepting or disbursing electronic funds/benefits, taking into consideration the benefits and costs to the agency, other state agencies, and the general public as a whole. The EFS is composed of two required forms: 1. Business Case 2. Cost Benefit Analysis

Business Case
The Business Case provides an analysis of the business environment including a description of who the expected customers are, the nature of the business, how the payment is currently being processed, if applicable, and the current and expected volume and timing of transactions. The Business Case also presents the benefits of the proposed project. The Business Case includes a description of the assumptions made in the economic feasibility analysis and the reasoning behind those assumptions.

Cost Benefit Analysis


The Cost Benefit Analysis summarizes the revenues and costs involved with the proposed project. The amounts in the Cost Benefit Analysis should reflect the amounts and assumptions in the Business Case. An analysis summarizing the impact to the agency, other state agencies, and the general public is also included, as applicable.

Economic feasibility elements include, but are not limited to:


Increased agency revenue, Decreased agency revenue, Increased agency costs, Decreased agency costs, Increased revenue to other agencies and/or the general public, Decreased revenue to other agencies and/or the general public, Increased costs to other agencies and/or the general public, Decreased costs to other agencies and/or the general public, and Other public benefits.

Technical Feasibility
The Technical Feasibility Study assesses the details of how you will deliver a product or service (i.e., materials, labour, transportation, where your business will be located, technology needed, etc.) Think of the technical feasibility study as the logistical or tactical plan of how your business will produce, store, deliver, and track its products or services. A technical feasibility study is an excellent tool for trouble-shooting and long-term planning. In some regards it serves as a flow chart of how your products and services evolve and move through your business to physically reach your market.

Behavioral Feasibility Study

Behavioral Feasibility determines how much effort will go into educating, selling, and training the user staff on a candidate system.

Feasibility Report
The report contains the following section: 1. Cover Letter 2. Table of Contents 3. Detailed Findings 4. Economic Justifications 5. Recommendations & Conclusions 6. Appendixes

Introduction I. Attention-getting statement - gain the attention of the audience by using a quotation, telling a brief story or humorous anecdote, asking a question, etc. II. Thesis statement - state the specific purpose of your presentation here. III. Preview statement - overview of all of your main points. Body I. First main point A. Subpoint 1. Sub-subpoint 2. Sub-subpoint B. Subpoint 1. Sub-subpoint 2. Sub-subpoint 3. Sub-subpoint II. Second main point A. Subpoint 1. Sub-subpoint 2. Sub-subpoint B. Subpoint 1. Sub-subpoint 2. Sub-subpoint 3. Sub-subpoint C. Subpoint Note: The number of main points, subpoints and sub-subpoints you use will vary depending on how much information you have to convey and how much detail and supporting material you need to use. Subpoints and sub-subpoints are comprised of the supporting material you gather in your research. You should rarely have more than five main points in any presentation. Conclusion I. Summary statement - review all of your main points. II. Concluding statement - prepare a closing statement that ends your presentation smoothly.

Oral Presentation