Project Planning & Feasibility Study

Project Planning & Feasibility
Study

Learning Objectives
 Describe steps involved in the project initiation
and planning process
 List and describe various methods for assessing
project feasibility
 Describe the differences between intangible
and tangible, costs and benefits, and between
recurring and one-time benefits and costs
2

Learning Objectives
 Detail various methods of cost/benefit analysis
 Describe the general rules for evaluating the
technical risks associated with “setting up of
apparel manufacturing factory” project
3

 Project Initiation
 Establishment of project team
 Project Initiation Plan
 Estt. of Management Procedures
 Project Planning
 Defining clear, discrete activities and the work
needed to complete each activity
Initiating & Planning Projects
4

 Deliverables and Outcomes
 Project Plan
 Scope
 Benefits
 Costs
 Risks
 Resources
 Standard Operating Procedures (SOP)
 Describes deliverables
 Outlines work needed to be performed
Initiating & Planning Projects
5

Project Planning
Guidelines for Project Plans
 Use project plans to coordinate i/o controlling
 Make use of different personalities
 Empower workers to estimate their own work
 Describe value-creating tasks i/o activities
 Define specific and tangible milestones
 Use check lists, matrices, and other supplements
to project plans
6

Building the Project Plan
 Four Sections
 Introduction
 Operations Description
 Feasibility Assessment
 Management Issues
7

 Introduction
 Brief overview
 Recommended course of action
 Project scope defined
 Who will be involved (internal/external)
 Inter-department interactions
8

 Operations Description
 Outline of possible alternative solutions
 Narrative format
 Feasibility Assessment
 Economic / Technical / Operational / Schedule
 Legal and contractual / Political
9

 Management Issues
 Outlines concerns that management may have
about the project
 Team composition
 Communication plan
 Project standards and procedures
10

Internal Factors
 Infrastructure
 Project scope
 Labor relations
 Project location
 Project leadership
 Organizational goal
 Management approach
 Technical manpower supply
 Resource and capital availability 11

External Factors
 Public needs
 Market needs
 National goals
 Industry stability
 State of technology
 Industrial competitors
 Government regulations
12

Analysis Phase
 Gather information
 Problems/issues (productivity, wastages)
 Info related to implementation
 Define operational requirements
 Build prototypes to gauge requirements
 Prioritize requirements
 Generate and evaluate alternatives
 Review recommendations with management 13

Design Phase
 Design and integrate the work flow
 Design the operational architecture
 Design the workstations for different
operations
 Design and integrate the reporting system
 Prototype for a/m designs
 Design & integrate the flow of info & raw mat.
14

Implementation Phase
 Construct SOPs for each department
 Have pilot runs for testing purposes
 Check data and document the changes required
in SOP
 Train users and implement the SOPs
15

Support Phase
 Maintain the operational systems
 Refine/improve the operations
 Support the users
16

Project Feasibility
 Measure of how beneficial or practical the
development of the SOP will be to an
organization.
 How will the feasibility be measured?
 How will the feasibility be assessed in the
long run?
18

Assessing Project Feasibility
 Six Categories
 Economic
 Technical
 Operational
 Schedule
 Legal and contractual
 Political
19

Assessing Economic Feasibility
 “Will it make economic sense if it works and is
built?”
 “ Will it generate PROFITS?”
20

How cost-effective is the project or solution?
 Cost – Benefit Analysis
 Determine Benefits
 Tangible Benefits
 Intangible Benefits
21

 Tangible Benefits
 Can be measured easily
»Cost reduction and avoidance
»Error reduction
»Increased flexibility
»Increased speed of activity
»Better mgmt. planning and control
»Entering new markets for high sales 22

 Intangible Benefits
 Cannot be measured easily
Examples
• Increased employee morale
• Competitive necessity
• More timely information
• Promotion of organizational learning and
understanding 23

 Determine Costs (tangible/intangible costs)
 Tangible Costs
 Can easily be measured in rupees
• E.g. Hardware
 Intangible Costs
 Can’t be easily measured in monetary terms
• E.g. Loss of customer goodwill, Loss of
employee morale 24

 One-Time Costs
 Associated with project startup, initiation and
development
 Includes….
 Development of SOPs
 Purchase of m/c, equipment, etc.
 User training
 Site preparation 25

 Recurring Costs
 Associated with operational expenses
 Includes:
 m/c maintenance
 Expense towards repairs, spare parts
 Folders, new add ons (presser foot, folders,
etc.)
 Consumables
26

 Time value of money (TVM)
 The process of comparing present cash outlays
to future expected returns
27

 Cost-benefit analyses
How much will the system cost?
Development costs
Operation costs
Maintenance and support costs
Do we possess the necessary technology?
Do we possess the necessary technical
expertise?
Is the schedule reasonable?
28

 Payback analysis
How long will it take to recoup the costs of
this project?
Return on investment (ROI) analysis
Net present value analysis
29

Tangible benefits can be easily quantified
Measured in terms of monthly or annual savings,
or of profit to organization
Intangible benefits more difficult to quantify
Benefit Analysis
30

Tangible Benefits
Higher productivity
Increased throughput (V)
Decreased response time
Elimination of job steps
Increased sales
Reduced credit losses
Reduced expenses
Intangible Benefits
Improved customer goodwill
Improved employee morale
Better service to community
Better decision-making
31
Benefit Analysis

Assessing Technical Feasibility
 Technical Feasibility
 Is the proposed solution practical? “Can it be
built?”
 Do we possess the necessary
technology/technical expertise? “Can WE build
it?”
 Is the schedule reasonable?
32

Project risk can be assessed based upon:
Project size (big/small)
Project structure (complex/simple)
Firm’s experience of biz. Operations
(new/experienced)
33
Assessing Technical Feasibility

 ability to construct the operational system??
 May fail to attain benefits,
 cost/ time overruns
 inadequate productivity levels
 Labour/supervisor unable to integrate with
existing m/c, equipment, systems
34
Technical risks

Assessment of how a proposed system solves
business problems or takes advantage of
opportunities
Operational Feasibility
35

 Questions to Ask
 How well will the operational system work in
the organization?
Will the operational system help achieve
productivity benchmarks?
How do end users and management feel about
the operational system?
Has a usability analysis been conducted? 36
Operational Feasibility

How reasonable is the project timetable?
It is the assessment of time frame and project
completion dates with respect to organization
constraints for affecting change
Schedule Feasibility
37

Assessing Other Feasibilities
 Legal and Contractual Feasibility
 Assessment of legal and contractual
ramifications of the project
 Political Feasibility
 Assessment of key stakeholders in
organization’s view toward proposed project
38

Organization
Organizational
Objective
Organizational
Use of
Technology
39

Frequent Causes of Failures
 Taking shortcuts with methodology
 Communication gap
 Lack of adequate experience
 Lack of adequate expertise
 Over confidence
 Undue optimism
 Lack of focus 40

Project Planning & Feasibility Study

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