Project feasibility
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The document discusses the Gujarat International Finance Tec (GIFT) City project in India. Key points: - GIFT City was envisioned as a world-class financial hub to rival other global cities, but it is facing significant delays due to a lack of proper planning and clearances. - Several buildings are left incomplete due to issues obtaining permission for heights from the Airport Authority. Additional delays stem from the lack of underground power line clearance. - The project has not attracted any clients due to an absence of regulatory guidelines, jeopardizing the viability of establishing financial services there. - Poor coordination between planning and implementation has put the 78,000 crore project at risk of becoming a "
Project feasibility
- 2. Feasibility Study • A feasibility study is an analysis of the viability of an idea through a disciplined and documented way 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.
- 4. India Infrastructure: A story of bad planning, poor execution GIFT City: A white elephant in the making • The latest in the list of poor planning and project coordination, is the Gujarat International Finance Tec (GIFT) City that is coming up on 886 acres of land near the Ahmedabad airport. This was to be Narendra Modi’s showpiece project launched in 2007, when he was the Chief Minister of Gujarat. GIFT is a 50:50 joint venture between International Leasing and Financial Services (ILFS) and a state government firm.
- 5. GIFT • The vision was to develop a world class integrated financial services centre, IT hub and a multi-specialty special economic zone (SEZ) on the lines of those seen in London, Paris, Shanghai and Tokyo, with all amenities of a modern city that would include residential, commercial, institutional, hospitality and retail. The project is expected to create a million direct and indirect jobs. • The plan was to develop GIFT as a superior alternative to Mumbai and draw investors both from Mumbai and the international business community to relocate to GIFT making it a thriving and vibrant business city. The development of the first phase is well underway with many superstructures nearing completion.
- 6. GIFT • The 78,000 crore project is now caught in red tape! Lack of clearances has resulted in several buildings being left incomplete with power supply yet to be made available. What is worse, is the fact that most buildings envisaged to come up in the project are high rises and do not have the requisite clearances from the Airports Authority of India (AAI). Now the AAI has given permission for buildings to have a maximum height ceiling of 191 metres above sea level. • GIFT City has envisaged 110 high rise buildings with Diamond Tower, the tallest building in the project planned to rise up to 410 metres. Two other buildings in the project are expected to have a height over 350 metres. GIFT City has requested the AAI for permission to build buildings up to 476 metres. • In addition to this delay, the National Highways Authority of India (NHAI) has not cleared permission to lay the underground power cables to the city.
- 7. GIFT • And to top it all, the entire project which hinges on financial services, has not been able to attract a single client to set up operations, mainly due to lack of norms of operating procedures. Both the Finance and Commerce ministries at the centre have been slow to announce clear regulatory guidelines, without which financial services cannot be launched from the City. • This brings to question as to why and how is a project of this stature and vision allowed to be publicly announced and construction undertaken without all the above mentioned clearances. This is a 78,000 crore project where India’s capability and prestige is involved, so who is responsible for this mess? This is a clear example where the project gets announced first and clearances applied for later.
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- 32. Technical Feasibility • Is the proposed technology or solution practical? • Do we currently possess the necessary technology? • Do we possess the necessary technical expertise • …and is the schedule reasonable for this team? • Is relevant technology mature enough to be easily applied to our problem? • What kinds of technology will we need? • Some organizations like to use state-of-the-art technology • …but most prefer to use mature and proven technology. • A mature technology has a larger customer base for obtaining advice concerning problems and improvements. • Is the required technology available “in house”? • If the technology is available: • …does it have the capacity to handle the solution? • If the technology is not available: • …can it be acquired?
- 33. Economic Feasibility • Can the bottom line be quantified yet? • Very early in the project… • a judgement of whether solving the problem is worthwhile. • Once specific requirements and solutions have been identified… • …the costs and benefits of each alternative can be calculated • Cost-benefit analysis • Purpose - answer questions such as: • Is the project justified (I.e. will benefits outweigh costs)? • What is the minimal cost to attain a certain system? • How soon will the benefits accrue? • Which alternative offers the best return on investment? • Examples of things to consider: • Hardware/software selection • Selection among alternative financing arrangements (rent/lease/purchase) • Difficulties • benefits and costs can both be intangible, hidden and/or hard to estimate • ranking multi-criteria alternatives
- 34. Schedule Feasibility • How long will it take to get the technical expertise? • We may have the technology, but that doesn't mean we have the skills required to properly apply that technology. • May need to hire new people • Or re-train existing systems staff • Whether hiring or training, it will impact the schedule. • Assess the schedule risk: • Given our technical expertise, are the project deadlines reasonable? • If there are specific deadlines, are they mandatory or desirable? • If the deadlines are not mandatory, the analyst can propose several alternative schedules. • What are the real constraints on project deadlines? • If the project overruns, what are the consequences? • Deliver a properly functioning information system two months late… • …or deliver an error-prone, useless information system on time? • Missed schedules are bad, but inadequate systems are worse!
- 35. Operational Feasibility • How do end-users and managers feel about… • …the problem you identified? • …the alternative solutions you are exploring? • You must evaluate: • Not just whether a system can work… • … but also whether a system will work. • Any solution might meet with resistance: • Does management support the project? • How do the end users feel about their role in the new system? • Which users or managers may resist (or not use) the system? • People tend to resist change. • Can this problem be overcome? If so, how? • How will the working environment of the end users change? • Can or will end users and management adapt to the change?
- 36. Feasibility Study Contents 1. Purpose & scope of the study • Objectives (of the study) • who commissioned it & who did it, • sources of information, • process used for the study, • how long did it take,… 2. Description of present situation • organizational setting, current system(s). • Related factors and constraints. 3. Problems and requirements • What’s wrong with the present situation? • What changes are needed? 4. Objectives of the new system. • Goals and relationships between them 5. Possible alternatives • …including ‘do nothing’. 6. Criteria for comparison • definition of the criteria 7. Analysis of alternatives • description of each alternative • evaluation with respect to criteria • cost/benefit analysis and special implications. 8. Recommendations • what is recommended and implications • what to do next; • E.g. may recommend an interim solution and a permanent solution 9. Appendices • to include any supporting material.