EVALUATE THE FEASIBILITY OF A PROJECT

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1 EVALUATE THE FEASIBILITY OF A PROJECT Timeframe: Learning Outcome: Recommended reading: Multimedia: Section overview 12 hours Develop a feasible project strategy Plan a complex project Chapter : Tools for complex projects, (Remington and Pollack, 2010) The need for new paradigms for complex projects, (Williams, 1999) How to calculate Return On Investment (ROI), The first year of project management introduced you to project planning. The second year focussed on project implementation planning. This year, we will discuss conducting a feasibility study to evaluate whether the project will work or not. Evaluate Project Feasibility According to Scheid (2011) a feasibility study is used to find out whether a project is viable before investing into the resources it will take to implement the project. A feasibility study could also determine whether the project will be profitable. A feasibility study is usually conducted before project initiation. To conduct a feasibility study, the steps outlined in Figure 1 should be followed: FIGURE 1: STEPS TO CONDUCT A FEASIBILITY STUDY Project description Purpose / goals Timeline Costs and budgeting Market analysis Resources Project process (Source: Scheid, 2011) These steps will be discussed individually in this section of the study guide.

2 Project Description A project description is: a formally written declaration of the project and its idea and context to explain the goals and objectives to be reached, the business need and problem to be addressed, potentials pitfalls and challenges, approaches and execution methods, resource estimates, people and organizations involved, and other relevant information that explains the need for project start up and aims to describe the amount of work planned for implementation (Linman, 2011). When writing the project description the rule of the C s could be followed. This rule is described in Table 1. TABLE 1: THE RULE OF THE C S Clear Concise Complete Credible Ensure that the document is simple and unambiguous. The sentences must be to the point. Try to avoid terminology except if the project requires it. The project description must describe the project in detail. Your focus should be on the project and not any other link to projects or terminologies. The description needs to include all the concerns and aspects of the project. The information provided in the project description must be relevant and up to date. (Source: Linman, 2011) This section should also include the project stakeholders and the expected end result of the project. Establish the project goals You have studied the development of project goals and objectives using the S.M.A.R.T principles. In this section of the project description you need to list the long-term and short-term goals of the project. Determine the Project Timeline You have studied project scheduling in year one and year two. Can you list at least three different scheduling tools and techniques?

3 In this section of the feasibility study, you need to plot the timeline of the project. You could use a Work Breakdown Structure, a network diagram or any scheduling tools and techniques you prefer to use. The generic steps to developing a project schedule are listed below for revision purposes: 1. Determine the tasks and place them in the schedule; 2. Determine the relationship between the tasks;. Assign each task to a team member;. Estimate the effort each task will require; 5. Consider other variables concerning scheduling (constraints, assumptions, lag time, risks, possible staff training time); 6. Build in contingency times for the schedule; 7. Identify the critical path of the project; 8. Check team member work allocations for over-load; 9. Repeat step and 5-8 to establish the baseline of the schedule; and 10. Place the schedule in a scheduling tool. (Source: Project Management Advisor, 2006) Below is an example of a project schedule provided by project management advisor (2006): Example: Project Schedule The project schedule is a detailed plan of major project phases, milestones, activities, tasks, and the planned start and end date for each task, and the resources allocated to each task. Project Management Improvement Project Phase 1 Effort Estimate in Days Planned Start Date Planned End Date 1 Initiate Project 1.1 Develop Project Charter 06/01/1 06/08/ Define Scope.00, Core Team 06/09/1 06/15/ Define Requirements.00, Core Team 06/16/1 06/17/ Identify High-Level Roles /16/1 06/20/ Develop High-Level Budget 1.00 Identify High-Level Control 06/21/1 06/21/ Strategies Finalize Charter and Gain 06/21/1 06/0/ Approvals Consolidate and Publish Project 06/21/1 06/2/ Charter Hold Review Meeting /2/1 06/2/1

4 Revise Project charter /27/ Gain approvals /29/1 2 Plan Project 2.1 Develop Work Plan Develop Work Breakdown 07/01/ Structure Develop Project Staffing Plan /07/ Develop Project Schedule.00 07/12/ Develop Project Budget.00 07/15/1 2.2 Develop Project Control Plan Develop Communication Plan /15/ Develop Quality Management 07/17/ Plan 2. Finalize Project Plan and Gain 07/22/1 Approvals 06/28/1 06/0/1 07/06/1 07/11/1 07/1/1 07/20/1 07/17/1 07/21/1 07/29/1 Execute and Control Project.1 Design Framework Define framework stages and 08/01/1 08/15/1.1.1 activities Design framework content 08/16/1 08/18/ formats Design web framework delivery 08/19/1 08/1/ tool.2 Build the Framework 09/01/1 10/1/1.2.1 Write the framework content 6 Review framework content for 09/15/1 10/21/ quality 08/19/1 08/1/1.2. Build web tool prototype Test the Framework 09/19/1 11/25/1..1 Test usability of web tool.00 10/19/1 11/25/1..2 Test usability of content.00.. Adjust framework based on user feedback. Implement Framework..1 Move framework to production environment..2 Announce availability of framework /18/1 12/01/1 12/19/1 11/0/1 12/16/1 12/0/1, core team Name, Name2 Name Name2, core team, review team Name, web developer core team, review team core team, review team Name2, Name

5 Close the Project.1 Conduct Post-Project Review 01/0/1 01/1/1 01/10/1 01/1/1, core team, review team, core team, review team.2 Celebrate Project Financial Feasibility Cost estimating involves developing an approximation (estimate) of the costs of the resources needed to complete project activities. Project cost estimating is usually performed by adding estimates for individual project elements into a project total. The pieces can vary in size and number from a few large chunks of a project with known costs, to hundreds or thousands of discrete tasks or individual work packages. The estimate of a project is prepared as a measure against which to control expenditure on the project, and is known as the benchmark or baseline (Project Management Knowledge.com, 2010). Level of detail Depending on the level of cost detail required for a specific project, estimates will vary in the level of detail they include. There are three phases of estimation, which is described in Table 2. TABLE 2: PHASES OF ESTIMATION Order-of-magnitude estimation: Indicative estimation: Definitive estimation: This is done without any precise data, based on past experience of similar work, or on published output or cost information. The typical level of accuracy is about 25 %, merely to get an idea of the magnitude of the cost for example R1 000 or R Therefore, generous contingency funds are provided. The indicative estimate is based on known information and published data such as electronic databases or prices indexes. These are generally accurate to plus/minus 10 to 15 percent. A definitive estimate is produced from supplier quotes, contractor-supplied prices and so on. In other words, it is based on the most realistic and current costs obtainable. No measurement can be completely accurate, but definitive estimates should be within 5 percent of an accurate estimate of costs. (Source: Roberts & Wallace, 2002) Top down costing Here the cost of a previous, similar project is used. Care must be exercised as costs that seem analogous may actually vary because of differing specifications (Langenbrunner, Chashin and O Dougherty, 2009: 25).

6 Activity based costing (ABC) This is based on the consumption of resources. It is not exact and involves many value judgements. The cost of an activity for a project is defined as the average cost of the activity multiplied by the number of times the activity is required for that project (The Economist, 2009). An example is given below Activity Time Unit Rate Cost Desk top research 5 hours Per hour R R Writing manual 20 hours Per hour R R2, Desk top publishing 5 hours Per hour R R00.00