feasibility studies and reports

Feasibility Studies and Reports

Purpose and Format

What are Feasibility Studies?

• Feasibility studies analyze the technical and economic practicalities of potential courses of action.

• The results of these studies are reported in feasibility reports.

What are Feasibility Reports?

• Feasibility reports are similar to activity reports [e.g. lab reports with results] and product evaluations because they discuss activities and products.

• However; feasibility reports discuss proposed activities and products, whereas activity and product evaluations discuss completed activities and products already in use.


• Because hard data is often not yet available, feasibility reports may use projected, rather than substantiated facts and data.

• Also, feasibility reports may discuss multiple proposed activities and products, whereas activity and product evaluations discuss only one completed activity or product.


• Feasibility reports recommend courses of action based on technical and economic analyses. They are written in response to requests from management and clients under circumstances like those following:

Circumstances Warranting Feasibility Reports-Examples

• To evaluate the potential for success or a proposed activity orproduct, such as

– a new marketing strategy

– the replacement of an obsolete tool to improve production

– the purchase of a new product to improve production

Circumstances Warranting Feasibility Reports

• To evaluate success potential for a proposed course of action.

• When taking no action is the only alternative to the proposed course to determine potential damage control.

• To compare proposed activities or products to determine the best of multiple alternatives .

Circumstances Warranting Feasibility Reports• Usually feasibility studies and reports are undertaken to evaluate the

potential for success of a proposed activity or product, such as a new marketing strategy, the replacement of an obsolete tool to improve production, or improve performance.

• The proposed activity or product is hoped to be an improvement over the present satisfactory activity or product.

Circumstances Warranting Feasibility Reports

• Taking no action is sometimes the only alternative to the single proposed activity or product, but taking no action may not always be aviable choice, as in the case of sanctions imposed on a company by anoutside agency like the EPA or OSHA.

• In such cases, the “damage control” model applies to the report.

Circumstances Warranting Feasibility Reports• To compare proposed activities or products to determine the best of

multiple alternatives such as the site location for a new facility or the purchase of a new pump.

• To determine (when the present activity is satisfactory), whether taking no action is the best alternative.

• To determine, when the present activity is unsatisfactory, which one ofthe proposed activities must be selected.

The Economic Feasibility Report1 When the present activity or product is satisfactory, and therefore,

taking no action is an alternative, to the proposed activity or product, for a proposal to be a satisfactory alternative, either:

– The benefits must exceed the costs (commonly used in private industry) or

– The benefits divided by the costs must equal 1.0 (commonly used by government agencies and non-profit organizations such as educational institutions).

The Economic Feasibility Report2 When the present activity or product is unsatisfactory, and therefore

taking no action is not an alternative. (e.g., action must be taken eitherby necessity of situation, or contractual obligation), the most satisfactory alternative then is selected based on either:

– The greatest benefits minus costs, even when the costs exceed the benefits for all alternatives (commonly used in private industry). Or

– The highest ratio of benefit divided by cost, even when this ratio does not exceed 1.0 for all alternatives (commonly used by government agencies and nonprofits).

The Economic Feasibility Report

• A technical feasibility analysis is typically the result of significant research aid development.

• The criteria for acceptance of an activity (e.g.. an improved chemical process) or a product (e.g. a larger carburetor) are determined by comparing the increased benefits (e.g., increased acceleration using a proposed carburetor) with the increased cost in dollars plus the "disbenefits" (disadvantages) (e.g. increased fuel consumption and maintenance).

The Sections of a Feasibility Report

• INTRODUCTION

• BACKGROUND

• SCOPE

• DISCUSSION

• CONCLUSIONS

• RECOMMENDATIONS

INTRODUCTION

• The introduction is first a statement of the problem, in essence the big question that is to be answered by the report’srecommendations.

• The introduction should include the. subject and purpose of the study and its authorization.

• Note the importance of the authorization, which provides youwith the authority to gather data and enlist the help of other employees.

BACKGROUND

• The background should include the changes that occurred to create the necessity for this study.

• It should also discuss why the circumstance is important and merits this consideration.

SCOPE

• The statement of scope discusses proposed alternatives to the present activity or project that are the basis of the study.

• It should be clearly stated in the scope section when the present activity or product (or its absence if no activity or product presently exists) is satisfactory.

• When only one alternative is proposed, the present activity or product (or its absence) is deemed to be a viable option unless otherwise stated.

Scope - continued

• Include the basis for selecting the proposed activities or products (e.g.,data from scale model tests that arc deemed to be sufficiently accurate) and

• conditions that limited the selection of proposed activities or products (e.g., the proposed activity must not require an inventory of spare parts, or the proposed product must not cost more than $2000/yr. for operating expenses.).

Discussion

• It is in the discussion phase that you must present your figures and calculations for each alternative, treating each alternative as a separate unit to avoid confusion.

• In this section, spreadsheets, graphs, and other materials may be inserted into the text, or they may be referenced by appendix numbers.

Conclusions• The Conclusions section discusses the natural results from the

information presented in the discussion section. This section is the link between the Discussion and the Recommendations.

• Because this section links the Discussion and Recommendations, the Conclusions section should be logical and all bottom-line figures should be calculable by the reader from the information provided.

Recommendations• The Recommendation section presents the course or action

determined as a result of this study. The first recommendation discussed is usually the course of action that is the most advantageous to resolve the problem.

• When a proposed course of action is recommended over the present course of action, it is appropriate to discuss other concerns that are notthe subject of the analysis. For example, for each recommended course of action, discuss the method, time required, internal capabilityof the organization, and availability of resources.

Recommendations - continued

• Also, related effects can be discussed such as the impact on other departments, other components, and the environment. When the present course of action remains the preferred course of action, alternative courses of action may be suggested for further study.

Establishing Criteria

• In order to evaluate choices properly, one must first establish the standards for evaluation.

• A criterion (singular) has three elements:

– Name uniform identification

– Standard established limit of the criterion

– Rank weighted value in the decision

Three Types of Criteria

• Technical Criteria: operating characteristics of processes, mechanisms, etc.

• Management/Maintenance Criteria: concerns of day-to-day operation

• Financial Criteria: cost and budget matters

Development of Criteria

• To create criteria, you must first list questions that must be answered to make a proper decision and make recommendations.

• Next, develop answers to these questions that establish parameters for the decision process: maximum and minimumperformance standards, material quality, etc.

Using Criteria

• Once the criteria have been established, they must be applied uniformly.

• Measurement standards must also be consistent; all length measurements, for example, should be expressed in either metric or English standards; all temperature measurements should be expressed on the Fahrenheit, Celsius, or Kelvin scale.

Ranking Criteria

• Ranking is accomplished by determining how seriously each item can affect the successful completion of the project or process.

• Example: will the item under consideration

– Prevent or halt the activity if the standards are not met?

– Slow or impede the activity if standards are not met?

– Have little or no effect on the activity either way?

Format and Organization

• Your format should be consistent with the standard format foryour company or group.

• If no format is prescribed for you, you may develop your own. You must, however, be consistent in your application ofheadings, tabulation, spacing, numbering, bulleting, and all other aspects of the physical document.


• Organize the discussion section according to criteria, with each criterion receiving a major heading. Don’t try to play down an unfavorable item by placing that criterion in a sub-part.

• Use parallel construction in your organization, treating all criteria sections in the same respective order for each option.


• Each section should deal with one criterion and evaluate the alternatives in terms of that criterion.

• Each section should be a microcosm of the larger context of the report: introduction, body and conclusion.

• The introduction should define the criterion and discuss its standard, rank, and source if these aspects are not discussed previously.


• In the body, explain the relevant facts about each alternative in terms of the criterion.

• In the conclusion, state the judgment you have made as a result of applying this criterion to the facts.

• In cases of multiple options, you may wish to treat each option separately, applying the criteria in uniform order to each choice within each option’s section.

A Final Note:

• Take your audience into consideration. Readers of the report may not have the same technical background that you do. Thus, you should follow Orwell’s dictum to use “everyday English equivalents” in place of jargon.

feasibility studies and reports

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