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5 Initial Study Inputs RSR Feasibility Project Study

This document outlines the key aspects and steps in conducting a project feasibility study. It discusses that a feasibility study determines if a project is technically feasible, cost-effective, and profitable. The study examines factors like the market, cash flow projections, income statements, and expansion possibilities over a 3-5 year period. Ultimately, a feasibility study establishes the viability of an idea and whether an organization should proceed with the proposed project or business venture.

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Ginny Montalban
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235 views

5 Initial Study Inputs RSR Feasibility Project Study

This document outlines the key aspects and steps in conducting a project feasibility study. It discusses that a feasibility study determines if a project is technically feasible, cost-effective, and profitable. The study examines factors like the market, cash flow projections, income statements, and expansion possibilities over a 3-5 year period. Ultimately, a feasibility study establishes the viability of an idea and whether an organization should proceed with the proposed project or business venture.

Uploaded by

Ginny Montalban
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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PROJECT FEASIBILITY STUDY

( Mr. Roberto S. Rimorin, MPA, CrFA, CICA, FRIAdr)


Colllege of Business Administration, PUP, Sta. Mesa, Manila

A. Introduction

All businesses have to critically examine the actions they take, whether the business
is just starting out or has been in operation for a while. Establishing the viability of
an idea or action can ultimately determine whether a business succeeds or not. The
best tool for determining this is by conducting a feasibility study.

B. OBJECTIVES OF PROJECT FEASIBILITY STUDY

A feasibility study represents a definition of a problem or opportunity to be studies, an


analysis of the current mode of operation, a definition of requirements, an evaluation
of alternatives, and an agreed upon course of action. Consequently, the activities for
preparing a feasibility study are generic in nature and can be applied to any type of
project, be it for systems and software development, making acquisition, or any other
project.

Generally, it is an analysis and evaluation of a proposed project to determine if it is:


 Technically feasible;
 If feasible within the estimated cost, and,
 Will be profitable.

A feasibility study will take into account a variety of different factors and will work
out the profitability that the project will be completed, and that it will be profitable.

The question a feasibility study essentially tries to answer is: “Should we proceed
with the specific action plan?” On top of determining whether the plan is visible,
organizations can use a feasibility study for understanding the risks better and
preparing for them.
C. IMPORTANCE OF FEASIBILITY STUDY

It is important to remember that a feasibility is not the same as a business plan. A


business plan provides a planning function and defines the actions needed to take
a business idea into reality, whereas a feasibility study provides an investigation
into a specific function and whether it is feasible.

While it is important to conduct both plans before setting up a company, a business


plan should only be conducted once the business has been deemed viable by a
feasibility study for organizations to avoid costly or operationally exhausting
ventures.

The study is typically used in situations where important strategic decision needs
to be taken.

This can vary and some of the example situations include:

 Change in business location


 Purchase of new equipment or software
 Acquisition of another company
 Hiring of additional employees
 Establishing a new business venture in the market
 Entering a business venture with an existing market
 Others

As mentioned above, a feasibility study is often at the core of launching a business.


It can be the key to launching a successful start-up, as it helps to underline the future
pain points and to determine whether the plan is viable in the first place. Overall, a
feasibility study is the perfect tool for situations where the impact is likely to be big in
terms of operational or economic significance.

D. STEPS IN THE PREPARATION OF A FEASIBILITY STUDY

 Project Definition
The first thing you will need to do is to describe the proposed project in detail. You
have to make an outline what the project or venture aims to achieve, once
completed. In this section, you will cover a variety of different aspects around who
and what the project is likely to affect, and what the impact is likely to be. You will
also want to be clear at this point as to why the project or venture should go ahead,
and to define the ways it either boosts profit or solves the various problems. Talk
about what you are going to deliver and how you are going to deliver it.

 Market Research

Before launching a new product or service, run a feasibility study on the size and
demographics of the market to determine its potential. Analyze existing
competitors to see if your company will be able to break into the market. Saturated
markets are not always bad. Having several established competitors indicates that
there is money to be made in that industry. However, your feasibility study may
reveal that your company does not have the resources to compete, so you narrow
your focus to a smaller niche market instead. It this case, the feasibility study
stopped you from making a costly mistake and crippling your product before it
became established.

 Cash Flow

Estimate the costs of running your day-to-day operations. Add in the budget from
any planned expansions to find the total amount of funding you need to stay afloat.
Cash flow feasibility studies are often requested by lenders or investors to evaluate
the risk level of the business. If you company is just starting out, your feasibility
study should predict the amount of time until the company breaks even. Consider
possible negative outcomes to determine the effect on your timeline, such as
decline customer base and effect of other materials needed in your operations.

 Income Projection
a. Balance Sheet – The financial condition (Asset, Liabilities and
Stockholders’ Equity) of the company as of a given period of time.
b. Income Statement – The financial condition of the company reflecting
the results of the operations of the organization at a given year.
c. Profitability Ratios
d. Inventory Turn-Over Ratios

Financial statements projections for three (3) to five (5) years are usually
required in the feasibility study.

 Expansion Possibilities

Company’s expanding facilities, mergers and acquisitions, adding new


technologies, and effect of government rules and regulations are just some of
the factors to be considered in the possible plans in the quest for better
organization’s growth and development.

(Please refer to the Feasibility Project Study Criteria Suggested


Readings/Materials (Word) for better perspective on this area of study)

Thank You

Prof. Roberto S. Rimorin, MPA, CrFA, CICA, FRIAdr


Open University/College of Business Administration, PUP, Sta. Mesa, Manila

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