1. Slide 4.1 4E1 Project Management Project Feasibility

2. Slide 4.2 Lecture Objectives At the end of this lecture you should understand: What is involved in a feasibility study Feasibility dimensions, questions and checklists How different managers view potential projects Tools used in feasibility studies What can go wrong

3. Slide 4.3 Feasibility: Overview Why? Assessed under several headings Technical, logistical, … Financial, commercial, … Political, environmental, ethical, … Tools Prototypes, simulation, modelling Market research, focus groups

4. Slide 4.4 Some that didn’t make it… The Bristol Brabazon The Advanced Passenger Train The Ford Edsel New Coke Guinness Light Feasibility Studies Matter!

5. Slide 4.5 Technical Feasibility: Questions Classic questions Can it be done (better)? Should it be done? How novel? How risky? Challenges/showstoppers New technology, materials, environment, performance level, project scale, … Time, resources, skills needed

6. Slide 4.6 Financial Feasibility: Questions How much will it cost? Can we afford it? Ongoing maintenance costs? What is our financial capacity from: free cash flow? raising capital? recruiting partners? Reduce costs? Avoid large outlays by leasing or renting? Are other projects/needs competing for funds? Capital rationing Implications for gearing? Overall financial risk? Financial stress testing

7. Slide 4.7 Commercial Feasibility: Questions Technical Is project technically feasible? Technical risks? Project Will project meet its targets/objectives? Likely to finish on time? Is this the best project of those on offer? Internal implications For staff? For existing products/ ongoing projects? External factors Environmental implications? What external activities does project depend on? Will market be right for this building/road/product?

8. Slide 4.8 Political Feasibility: Questions Parties Who is behind project? What is their motivation? Who are stakeholders? Is this an all-round win? If not, who will lose? Might they try to stop the project? How strong a position are they in? Risks: how might the project be Delayed? De-railed? Sabotaged? Measures Steps to bring ‘spoilers’ on board? Trade-offs in buying off the opposition?

9. Slide 4.9 Five Views of a Project (ME) The Engineer’s View Marketing’s View The Accountant’s View Personnel’s View Other Views Proposed Project

10. Slide 4.10 Engineer’s View Technical focus People, materials, time required Impact Likely disruption Learning curve Safety Requirements Energy, equipment, resource availability Dangers Over-optimism Underestimate costs Lack of awareness of organisational issues Political naivety

11. Slide 4.11 Marketing’s View Consumer needs/reaction Size of market Market risk Implications Time to market Marketing effort/ positioning Impact on product line Customer safety Planning Product life cycle Spin-off possibilities Dangers Over-selling Poor understanding of technical problems/risks Piling on the pressure Lack of concern for financial implications

12. Slide 4.12 The Accountant’s View Scale and likely cost Profitability Return on investment Impact on cash flow Other cash needs Financing mechanisms Financial risk Control mechanisms/ ease of control Dangers: Poor under- standing of technical issues Too narrow a view of business implications “Cheese paring”

13. Slide 4.13 Personnel’s View Skills & training Availability of skills required Training required Knowledge transfer Recruitment Additional staff Hiring temporary staff Contractors – legal issues Impact on working conditions Industrial relations issues Dangers: Poor understanding of skills required Lack of technical understanding

14. Slide 4.14 Some Other Potential Problems External Regulatory matters Competitor behaviour Patents Security Image Impact on suppliers Business risk Internal Managerial capacity Technology risk Plan B Dangers: Politics Competition for resources All of the above are compounded when a project crosses national boundaries. Why?

15. Slide 4.15 Tools Prototypes Models Iconic Analogue Symbolic Simulation Powerful tool Wide scope Modelling Engineering Financial Forecasting Market research Common sense

16. Slide 4.16 Feasibility Checklists Useful for feasibility or planning Industry/context-specific

17. Slide 4.17 Feasibility Checklist Extract Availability of utilities Electrical power Potable water Other water Sewerage Other services Transport Existing roads Possible problems (e.g. low bridges) Nearest railhead Nearest seaport Nearest commercial airport Nearest airstrip Local transport insurance Physical conditions Seismic situation Temperature range Rainfall & humidity Wind forces and direction Dust Barometric pressure Site plans and survey Soil investigation/requirements Local conditions Local manufacturing capacity Local sources of bulk material Local plant hire Site safety and security Local human resources

18. Slide 4.18 Summary: Key Points Feasibility studies are common Especially if novelty, large scale and/or risk Many aspects to feasibility - not just technical There are various tools to help Different parties have different perspectives The object is to get everybody on board Even after all this, things can still go wrong