Take an example of developing a residential project and carry out the project feasibility analysis using the six laws of project feasibility.
Answers
Answer:
As the name implies, a feasibility analysis is used to determine the viability of an idea, such as ensuring a project is legally and technically feasible as well as economically justifiable. It tells us whether a project is worth the investment—in some cases, a project may not be doable. There can be many reasons for this, including requiring too many resources, which not only prevents those resources from performing other tasks but also may cost more than an organization would earn back by taking on a project that isn’t profitable.
A well-designed study should offer a historical background of the business or project, such as a description of the product or service, accounting statements, details of operations and management, marketing research and policies, financial data, legal requirements, and tax obligations. Generally, such studies precede technical development and project implementation.
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Types of Feasibility Study
A feasibility analysis evaluates the project’s potential for success; therefore, perceived objectivity is an essential factor in the credibility of the study for potential investors and lending institutions. There are five types of feasibility study—separate areas that a feasibility study examines, described below.
Technical Feasibility
This assessment focuses on the technical resources available to the organization. It helps organizations determine whether the technical resources meet capacity and whether the technical team is capable of converting the ideas into working systems. Technical feasibility also involves the evaluation of the hardware, software, and other technical requirements of the proposed system. As an exaggerated example, an organization wouldn’t want to try to put Star Trek’s transporters in their building—currently, this project is not technically f
Answer:
A feasibility study examines all of a project's pertinent aspects, including economic, technical, legal, and scheduling issues, to determine the project's chances of success.
Explanation:
Case study of the residential project:
According to a study of residential projects, it is difficult to forecast project feasibility. To determine the feasibility of such a project, project promoters must identify those aspects that they cannot control but have a significant impact on project cash flows.
BVG Developers' Silver Gracia is a proposed residential project in Ravet, Pune. The project offers apartments with a wonderful blend of contemporary architecture and features for a comfortable living environment. The apartments are available in the following layouts: 1BHK, 2BHK, and 3BHK. The project encompasses a total of 5 acres of land. Silver Gracia consists of four towers and a separate MHADA apartment complex. The building has 2P+18 floors.
All components of investment projects should be evaluated during the feasibility investigation. The decision-making process for huge projects is extremely complex, and it is impossible to address all elements. Most judgments are dependent on several factors, none of which can be quantified. As a result, multi-criteria assessment approaches are sometimes required to obtain a comprehensive assessment of a project's feasibility. The NPV, IRR, and B/C ratio are the best criterion for determining financial feasibility.
In the instance of the residential project "Silver Gracia," all three measures, namely the Benefit Cost Ratio, Net Present Value, and Internal Rate of Return, were found to be within acceptable bounds in ideal settings. It is determined that the project is viable when either the percentage of bookings exceeds 77% or the project is completed in less than 57 months from the start date.
Hence, Feasibility studies assist project managers in determining the viability of a project or commercial endeavour by identifying the elements that may contribute to its success. The research also reveals the possible return on investment as well as any hazards to the venture's success.
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