Feasibility

GOOD
AFTERNOON!!!
Name: Ramon dela Cruz Sager
Address: Poblacion, Bongabong,
Oriental Mindoro
Course: Bachelor of Science in Commerce
Major in Banking and Finance
School: Divine Word College of Calapan
Year Graduated: SY 1999 – 2000
Occupation: Bank Employee
Work Experience:
VISCO Holding Corporation
Bansud, Oriental Mindoro
Corporate Secretary
Accountant / Bookkeeper
Operations Assistant
Work Experience:
First Southern Island Finance Corporation
Roxas, Oriental Mindoro
Accountant/Bookkeeper
Corporate Secretary
Work Experience:
First Mindoro Microfinance Rural Bank, Inc.
Poblacion, Bongabong, Oriental Mindoro
Accountant/Bookkeeper,
Loan Officer
Acting Microfinance Head
Present Position:
Chief Compliance Officer
Work Experience:
Innovative College of Science and
Technology
Malitbog, Bongabong, Oriental Mindoro
Part-time Instructor
Accounting,
Income Taxation
Basic Finance
FEASIBILITY STUDY PREPARATION
AND ANALYSIS
The Feasibility Study
 It is a systematic inquiry to determine whether a specific

business undertaking could be implemented at a certain
acceptable profit level.
 It is not merely an investigation but at the same time a
plan or a framework on how the operation of a business
project shall be accomplished
 It is prepared not only for a new project but also for the
existing one.
The Feasibility Study
• Sometimes called a recommendation report, is a

conducted, after an exploratory work is performed, to
assess whether a larger project is advisable. It aims to
find out the probable market for the products; to
determine the probable income of operating the
project: and to show the contributions the project
can offer to the society, among others.
Types of Feasibility Study
 Market and Real Estate Feasibility

 Technology and System Feasibility
 Resource Feasibility
 Cultural Feasibility
 Operational Feasibility
 Legal Feasibility
 Schedule Feasibility
 Economic Feasibility
Market and Real Estate Feasibility
 Market Feasibility Study typically involves testing

geographic locations for a real estate development
project, and usually involves parcels of real estate
land.
 Developers often conduct market studies to
determine the best location within a jurisdiction, and
to test alternative land uses for a given parcels.
Market and Real Estate Feasibility
 Jurisdictions often require developers to complete

feasibility studies before they will approve a permit
application for retail, commercial, industrial,
manufacturing, housing, office or mixed-use project.
 Market Feasibility take into account the importance
of the business in the selected area.
Technology and System Feasibility
 This involves questions such as whether the

technology needed for the system exists, how difficult
it will be to build, and whether the firm has enough
experience using that technology.
 The assessment is based on an outline design of
system requirements in terms of Input, Processes,
Output, Fields, Programs, and Procedures.
Technology and System Feasibility
 This can be quantified in terms of volumes of data,

trends, frequency of updating, etc. in order to
estimate if the new system will perform adequately or
not.
Resource Feasibility
 This involves questions such as how much time is

available to build the new system, when it can be built,
whether it interferes with normal business operations,
type and amount of resources required, dependencies,
etc.
 Contingency and mitigation plans should also be stated
here so that if the project does over run the company is
ready for this eventuality.
Cultural Feasibility
 In this stage, the project's alternatives are evaluated

for their impact on the local and general culture.
 For example, environmental factors need to be
considered and this factors are to be well known.
 Further an enterprise's own culture can clash with
the results of the project.
Operational Feasibility
 Do the current work practices and procedures

support a new system.
 Also social factors i.e. how the organizational changes
will affect the working lives of those affected by the
system.
Legal Feasibility
 Determines whether the proposed system conflicts

with legal requirements, e.g. a Data Processing
system must comply with the local Data Protection
Acts.
 When an organization has either internal or external
legal counsel, such reviews are typically standard.
Legal Feasibility
 However, a project may face legal issues after

completion if this factor is not considered at this stage
it is about the authorization.
Schedule Feasibility
 A project will fail if it takes too long to be completed

before it is useful.
 Typically this means estimating how long the system
will take to develop, and if it can be completed in a
given time period using some methods like payback
period.
Economic Feasibility
 Economic analysis is the most frequently used

method for evaluating the effectiveness of a
candidate system.
Economic Feasibility
 More commonly known as cost/benefit analysis, the

procedure is to determine the benefits and savings
that are expected from a candidate system and
compare them with costs, if benefits outweigh costs,
then the decision is made to design and implement
the system.
Parts of a Feasibility Study
There are generally 5 major components of a project

feasibility study, namely:
1. Marketing
2. Technical
3. Management
4. Financial
5. Social Desirability
Market Study
Generally, investors’ are attracted to invest in a business
project with a minimal risk and a higher rate of return
on investment.
The major consideration is whether there is an ample
demand for the product being produced or proposed to
produce.
Market Study
If at the beginning, it is discovered that there is not
enough demand for the product nor a new demand can
be created, then, the project must be abandoned
immediately, before substantial losses will be incurred.
Market Study
If the findings indicate that there is a sufficient demand
for the product, then investigate the competitive
position of the firm in the industry.
Information on the prevailing prices of the product are
gathered and scrutinized.
Market Study
The present marketing practices of the competitors,
selling organization, terms of sales, channels of
distribution, location of sales outlets, transportation
and storing facilities and other information relative
thereto are also taken into account.
Market Study
Conclusions are drawn from the study.
These specifically identify whether there is adequate
demand for the product and that the project shall enjoy
competitive marketing position.
Technical Study
This aspect identifies whether the product could be
produced at the highest possible quality level with
minimum cost.
Technical Study
In a manufacturing firm, the items that are taken into
consideration are the following:
o Product
o Manufacturing process
o Plant size and production schedule
o Machinery
Technical Study
o Plant location and layout
o Structure
o Raw materials
o Utilities
o Waste disposal
o And other information deemed necessary in determining
technical feasibility.
Management Study
Basically, the objectives of the feasibility study are to
determine the appropriate business organization, the
people who will involved both before and during the
operating periods of the enterprise, and their functions.
Financial Study
This portions determines the profitability level of the
project which generally defined as the relationship of
the net income after taxes to the total investment.
It is largely based on the available opportunity cost in a
particular period of time, and place.
Financial Study
It also involves a thorough coverage of all the monetary
information of the enterprise.
Financial health of the business is assessed in the
financial statements and analysis showing the three
important accounting statements: income, cash flow
and balance sheets.
Financial Study
Pertinent financial ratios are also illustrated describing
the over-all firm liquidity, degree of indebtedness and
profitability.
Socio-Economic Study
The project may be classified as:
Government project
Private project
Government project
Socio-economic desirability is given first importance
and profitability only comes secondary.
Feasibility means socio-economic desirability.
Private project
Profitability comes first and socio-economic
desirability only come secondary.
Feasibility is synonymous with profitability.
Conducting a feasibility study
 Too often, we launch new ideas without thinking

through what our market is.
 Preparing a feasibility study will help you determine
if there is sufficient demand for the product or
service AND can the product or service be provided
on a profitable OR sustainable basis?
Before you begin we should think
about the following questions
 What defined market am I trying to reach?
 What specific companies/organizations are servicing
this market?
 Are they successful?
 Something similar?
 What is their market share?
 Is the market saturated or wide open?
Questions continued...
 What is the size of the market?

 Is it growing?
 Is it stable, volatile, trendy?
 How can you reach this market?
 How are competitors currently reaching the market?
 What do customers expect from this type of product
or service?
Questions continued...
 What are the business models of competitors?

 What core competencies must the product or service
have?
 What are “customers” willing to pay for this service or
product?
 What is your competitive advantage?
Market Assessment
 A market assessment may be conducted to help

determine the viability of a proposed product in the
marketplace.
 The assessment will help you identify opportunities
in the market or market segment
 If no opportunities are found, then you don’t have to
continue on with the feasibility study.
MARKET ASSESSMENT
 If opportunities are found, the market assessment

can give focus and direction to the “big idea.”
OVERVIEW OF FEASIBILITY STUDY
 Description of the project

 Market Feasibility
 Technical Feasibility
 Financial/Economic Feasibility
 Organizational/Managerial Feasibility
 Results/Next Steps/Conclusion
WHY DO A FEASIBILITY STUDY?
 Gives focus to the project

 Narrows alternatives
 Surfaces new opportunities
 Enhances the probability of success by addressing
factors early that could affect the project
 Provides quality information for decision making
 Helps in securing funding
 Helps to increase investment in idea
FOUR TEST FOR FEASIBILITY
• Operational Feasibility
• Technical Feasibility
• Schedule Feasibility
• Economic Feasibility
FINANCIAL ANALYSIS TOOLS
• Break Even Analysis

• Payback Period Analysis
• Cash Flow Analysis
• Net Present Value
• Return On Investment Analysis
THANK YOU!!!

Feasibility

Uploaded by

Copyright:

Available Formats

Feasibility

Uploaded by

Document Information

Original Description:

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Feasibility

Uploaded by

Copyright:

Available Formats

GOOD

 It is a systematic inquiry to determine whether a specific

• Sometimes called a recommendation report, is a

 Market and Real Estate Feasibility

 Market Feasibility Study typically involves testing

 Jurisdictions often require developers to complete

 This involves questions such as whether the

 This can be quantified in terms of volumes of data,

 This involves questions such as how much time is

 In this stage, the project's alternatives are evaluated

 Do the current work practices and procedures

 Determines whether the proposed system conflicts

 However, a project may face legal issues after

 A project will fail if it takes too long to be completed

 Economic analysis is the most frequently used

 More commonly known as cost/benefit analysis, the

There are generally 5 major components of a project

 Too often, we launch new ideas without thinking

 What is the size of the market?

 What are the business models of competitors?

 A market assessment may be conducted to help

 If opportunities are found, the market assessment

 Description of the project

 Gives focus to the project

• Break Even Analysis

You might also like