PRMA5112 – Project Management and Administration

Lecture 4
Project Feasibility, Selection, and Stakeholders

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Project Feasibility, Selection, and Stakeholders

Learning outcomes;
• Outline the importance and benefits of aligning projects with organisational objectives and
strategies;
• Discuss project feasibility using examples;
• Explain how the feasibility study is conducted;
• Discuss project selection using examples; and
• Outline project selection methods.

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KEY TERMS

• Appendices
• Dissemination plan
• Evaluation plan
• Executive summary
• Feasibility
• Portfolio
• Programme
• Recommendations
• Scalability
• Solicited

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Strategic planning and project alignment

Business planning considers required resources and where said resources will be employed.

Strategic planning determines the amount that needs to be spent on a certain activity at a
particular point in a project’s development. This considers factors such as time, place, space,
and approach.

Levels of project alignment;

1. People
2. Processes
3. Resources
4. Methodologies

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Levels of project alignment

• Projects need the right people to run them.

• The correct processes need to be followed and completed in a timely manner.

• Budgeting is an essential parr of resource allocation and remaining within a

budget can be very challenging.

• Methodologies must be adapted to suit a particular organisation’s specific

requirements and strategic objectives.

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Example of a standard methodology for project management

1. Technical baseline
– Statement of work
– Design specifications and equipment
– Work breakdown structure
– Timelines, phases, and schedules of work
– Spending curve

2. Functional and management baseline

– Curricula vitae and supporting documents for key personnel and important stakeholders
– Project policies, regulations, and procedures
– Organisational strategy for the commencement and duration of the project
– Responsibility assignment matrices

3. Financial baseline
– How expenses will be identified, evaluated and prioritised
– How will variances or deviations be explained and justified
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– How will reports be prepared and presented
Aligning strategic direction and project selection

Balanced scorecard
• These are used to measure strategic performance.

• The balanced score card bridges the gap between abstract strategic ideas and the
physical execution of processes.
• Examples of balanced scorecards include; financial perspective, customer
perspective, internal process perspective, and learning and growth perspective.

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Aligning strategic objectives and portfolio management

A portfolio consists of a number of programmes and projects.

• Effectively managed portfolios contribute to the growth and evolution of the business and
ensure that strategy is applied to all functional parts of the organisation.
• Project portfolio management (PPM) is a process that is undertaken to align a company’s
strategy with its activities.
• A portfolio manager will handle the revision of projects and decide which ones should
continue, which should end, and which require additional funding or further review.
• The PPM process is made-up of the following processes;
• Identify existing and potential projects
• Determine the impact projects have on strategic objectives
• Prioritise projects
• Allocate resources proportionally
• Change project strategy where required.
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Project selection

Project selection is the process of evaluating individual projects with the aim of
choosing specific projects to be implemented based on their objectives and relevancy
to the business objectives.

• Proper selection of a project to be invested in is important within the long-term

strategies of a company.
• Management, project manager and stakeholders are key role players in the project
selection process.

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Project selection methods
1. Benefit measurement methods;
– Benefit/cost ratio
– Economic value added
– Scoring model
– Payback period
– Net present value
– Discounted cash flow
– Internal rate of return
– Opportunity cost
2. Constrained optimisation
– Linear programming
– Non-linear programming
– Integer programming
– Dynamic programming
– Multiple objective programming
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Project selection

Factors for project selection;

• Project size

• Project length

• Experience with project management organization

• Philosophy and visibility of upper-level management

• Project location

• Available resources

• Unique aspects of the project

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Project feasibility

Project feasibility is an analysis done at the conceptual phase of the project lifecycle to
determine the cost-benefit of the project.

A well conducted feasibility study or analysis assists the project manager to;
• Plan the project development and implementation activities.
• Estimate the possible elapsed time, staffing, and equipment requirements.

• Identify the probable costs and consequences of investing in the new project.

Feasibility analysis provides the project manager with the predictable results of implementing
a specific project as well as general project requirements.

Project feasibility analysis is important as it is used to determine whether to proceed with the
project in terms of the cost requirements, development, and implementation phases.

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Project feasibility
When conducting a feasibility analysis, it is necessary to define the project’s basic approaches and its scope.
A typical feasibility study checklist might include:
Summary level
i. Evaluate alternatives
ii. Evaluate market potential
iii. Evaluate cost effectiveness
iv. Evaluate producibility
v. Evaluate technical base
Detail level
vi. A more specific determination of the problem
vii. Analysis of the state-of-the-art technology
viii. Assessment of in-house technical capabilities
ix. Test validity of alternatives
x. Quantify weaknesses and unknowns
xi. Conduct trade-off analysis on time, cost, and performance
Prepare initial project goals and objectives
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Prepare preliminary cost estimates and development plan
Project feasibility

The main aim of a feasibility analysis is to guide a project manager’s decision on whether
to terminate the project or to approve its next phase.
 The decision made at the end of the feasibility study should identify those projects that
are to be terminated.
 Once a project is deemed feasible and is approved for development, it must be
prioritized with previously approved projects waiting for development.

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Project feasibility
The feasibility analysis sets the basis of a preliminary planning. At this phase, the project is
defined.
The project definition process includes;
• General scope of the project
• Objectives and related background
• Project tasks
• Performance requirements
• Reference to related studies, documentation, and specifications
• Data items (documentation)
• Support equipment
• Customer-furnished property, facilities, equipment, and services
• Customer-furnished documentation
• Schedule of performance
• Exhibits, attachments, and appendices
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Importance and benefits of performing a feasibility study

1. Feasibility study allows a project manager to visualise and execute a project in a simulated environment
before committing any resources to that project’s completion.
2. It allows the project manager to follows a set of methodologies and consider possible variables for
chances of success for the project.
3. Provides focus for your project and outlines alternatives.
4. Narrows business alternatives.
5. Identify reasons not to proceed.
6. Improves chances of success.
7. Gives quality to the decision-making process.
8. Serves as proof that the project selection process was properly researched.
9. Assists in the attainment of loans and investment.
10. Allows the project manager to mitigate risks.
11. It is a roadmap for your project.
12. Gets all the stakeholders on the same page
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Types of feasibility

1. Financial feasibility
2. Technical feasibility
3. Operational feasibility
4. Schedule feasibility
5. Market feasibility
6. Regulatory feasibility
7. Organisational feasibility

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The components of a feasibility study

1. An executive summary
2. A clear description of the project
3. analysis of the competitive landscape
4. Operating requirements
5. Financial projections
6. Recommendations and findings

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Conducting a feasibility study

1. Conduct preliminary analysis

2. Prepare a projected income statement

3. Conduct market research

4. Plan business operations

5. Prepare a balance sheet

6. Conduct review and analysis

7. Decide whether to proceed

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 The end

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