ABSTRACT
Chapter 4 addresses the most important phase of any project prior to its development – the testing of its feasibility. Formal rigorous project feasibility analysis is now the norm, implementing project management practice and techniques using databases with modern software tools. Feasibility studies are carried out for risk mitigation, project optimisation, to avoid over-committing resources before project viability has been established and to assist with capital raising. The various types of feasibility study and common terminology are discussed. The three-phase approach is outlined: (1) order of magnitude; (2) pre-feasibility; and (3) definitive. The contents of a feasibility study report are identified and discussed. The inherent difficulties of budgeting and scheduling feasibility studies are identified. Indicative costs and possible time frames for the three phases are suggested. The importance of staffing the study team with experienced practitioners and an appropriate team structure is emphasised. Determining realistic capital and operating costs are two of the most important outcomes of feasibility studies. Confidence limits for the three phases and guidelines for contingency allowances are suggested. The risk to all parties involved in feasibility studies is highlighted, and areas of risk related to major components of a feasibility study identified. A detailed table of contents for a definitive feasibility study document is given in Appendix B.
