Feasibility report -basic concepts with example

Feasibility Report
By
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
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

• Market Feasibility
1.
2.
3.
4.
5.

Determine facility needs.
Suitability of production technology.
Availability and suitable of site.
Raw materials.
Other inputs

•
1.
2.
3.

Financial/Economic 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 feasibility
Environmental impact and their assessment

• 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.
2.
3.
4.
5.
6.
7.

Introduction/Executive Summary
Background
outline of project
Methodology/method of analysis
Overview of alternatives
Conclusion
Recommendation

Introduction/Executive
summary
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
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

OVERCOMING THESE WEAKNESS

What can do for maintain these
strengths?

What should I do to overcome these
weakness?

OPPORTUNITIES

THREATS

TAKING ADVANTAGE OF THESE
OPPORTUNITIES

OVERCOMING THREATS

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

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

•
1.
2.
3.
4.
5.
6.

Examples of benefits
cost reductions
error reductions
increased throughput
increased flexibility of operation
improved operation
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.

Structure of feasibility
report

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

Feasibility report -basic concepts with example

Feasibility report -basic concepts with example

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