Gain Exhaustive Knowledge On Pre-Feasibility Study, Feasibility Study And Detailed Project Report

What is a Pre-Feasibility Study?

A pre-feasibility study is the most crucial aspect of any project. It is basically the art of measuring the viability of the project with respect to the real world challenges and the benefit that it would bring to the organization. The results of the pre-feasibility study are probably the first hand project information which is taken into consideration by the decision makers and investors. Most importantly, it acts as a basis if an organization wants to carry out a major expansion program following a successful preliminary program. Simply put, the aim of a feasibility study is to evaluate and then remove all uncertainties that may tend to arise in the project. Experts believe that pre-feasibility study provides a basis for an in-depth design and construction.

Additionally, it throws light into the fact that whether it can be completed in a technically sound and economically viable way. The pre-feasibility study is often considered as an integral part of the project development process. It is even one of the determining factors of the feasibility study, which is more costly and resource intensive than pre-feasibility study. The pre-feasibility study helps in determining whether it should be undertaken or not.

However, it is to be noted that pre-feasibility depends a lot on the project itself, i.e. the generation, technology, etc. In some cases, several alternative technologies are also used for reaching a preliminary optimal solution. Though the pre-feasibility study does not provide a direct answer to how secured a project is and what would be the profit to earnings ratio, it may, however, highlight the most likely pursue greater profitability and areas that need further attention before securing the first round of funding.To get latest tenders, RFP and other government contracts for Pre-Feasibility Study, please Click Here.

What is a Pre-Feasibility Study?

A feasibility study is particularly an analysis that takes into consideration all the relevant factors of a project - including economic, technical, legal, and scheduling considerations. The goal is to ascertain the likelihood of completing the project successfully, within the stipulated timeline.

Project managers often use feasibility study to weigh the pros and cons of taking up the project before investing the company's time and resources. According to experts, a feasibility study provides a lot of crucial information to the company’s management and prevents it from blindly venturing into risky businesses.

Experts believe a detailed feasibility study comprises an in-depth analysis of the historical background of the business or project, including but not limited to the descriptions of the products or service, accounting statements, details of the operation and management, market share and policies, financial data, legal requirements, tax obligations, etc. You can check out a feasibility study example online to get a clear idea.

• Technical Feasibility - This study entirely focuses on the technical resources that are available to the organization. It helps businesses determine whether the technical resources meet the capacity and whether the team is skilled enough to convert the ideas into actually working systems. Experts speak; whenever relevant risks are identified by means of a detailed technical feasibility study, the best resources must be allocated as soon as possible in order to ascertain the risks posed by such risks. Simply put, the aim of technical feasibility study is to define a technically feasible PPP project.

• Economic Feasibility - This assessment typically includes a cost/ benefit analysis of the project. The goal of this study is to help organizations determine the viability and the probable cost and benefits associated with the project before the allocation of the final resources. To top it all, it serves as an independent project assessment and enhances the credibility of the project.

• Legal Feasibility - This assessment thoroughly analyzes whether any aspect of the project is conflicting with the legal requirements like zoning laws, data protection acts, social media laws, etc. Let's say if an organization wants to open up its new branch in a specific location – a feasibility study will help the organization to understand the legal complexities associated with that location and the ways to overcome the same. If there is any legal dispute associated with that area, a thorough feasibility study would provide them with all the details. In this way, it can help them save a lot of their time and money.

• Operational Feasibility - This assessment involves conducting a study for the purpose of analyzing and determining whether the needs of the organization can be met after the completion of the project. Added to that, it also analyzes how the project plan will cater to the requirements as stated in the requirements analysis phase of the system development.

• Scheduling Feasibility - This assessment involves undertaking a study in order to analyze and determine whether the project will be completed within time. In scheduling feasibility, the organization calculates how much time the project will take to complete.

• Sector Background Context & Broad Project Rationale - It provides information on the existing status of the physical infrastructure, baseline information in terms of physical infrastructure, and list of various other projects that requires capital and are essential for the successful completion of the project.

• Project Definition, Concept and Scope - This comprises the design, detailed engineering, and drawings as applicable in the project. These also serve as a reference for packaging of contracts either individually, or through combinations.

• Project Cost - This provides detailed knowledge of the cost of the project. This includes but not limited to the cost of land acquisition, physical infrastructure (component-wise cost), environmental compliance cost, rehabilitation and resettlement cost, cost of survey and investigation, etc.

• Project Institution Framework - This focusses on how construction work (if any) would proceed. It highlights whether any interference from a government organization is required and what are the formalities that are required to be followed.

• Project Financial Structuring - Project financial structuring involves a combination of equity, grant, debt and finance from private participation. It also examines the source of finance and analyzes the amount that each phase of the project will require. Additionally, it throws light into the relationship between the different phases of the project and the expenditure required.

• Project Phasing - Project phasing is particularly important for high-value projects. This involves breaking down a project in detail mentioning the activity/ tasks that are required to be completed within a stipulated time limit. Added to that, it highlights the relationship between each part of the project and the expected time to complete them.

• Project O&M Framework and Planning - Here, the key performance metrics in regard to billing & collections are selected (for the recent financial year, and if possible, the current quarter of the ongoing financial year). Additionally, the billing ratio (in terms of physical and financial units separately), cost of billing & collection (in absolute terms; as a per cent of total cost) are also taken into account.

• Project Financial Viability - The Project financial assessment explicitly states the cost of capital considered and calculation method implemented to deduce the same. This includes details of all the transactions carried out in the last 5 years and projections for the upcoming 20 years. The assumptions made in projections must also be included.

• Project Benefits Assessments - A list of benefits from both social and economic aspects in qualitative terms that can be reaped out from the project are first taken into account. Furthermore, the quantification of these benefits along with underlying assumptions is considered. Going forward, the impact on citizens/user segments are noted down.

For projects that are worth 100 crores (1 Billion), structured estimation of the Economic Internal Rate of Return (EIRR) is prescribed as a part of the Social Cost-Benefit Assessment. The EIRR incorporates monetization of the identified social benefits and adverse impacts for social perspective corrections to the costs and benefits considered for the purpose of financial viability assessments.

However, for projects where the EIRR is found to be less lucrative or is not as profitable as others, and the project planners that there are substantial benefits which are intangible, then the project EIRR analysis is supported by detailed, descriptive statements and assessments on such benefits. And for projects whose net worth is less than 100 crores, the EIRR becomes optional.

Benefits of Detailed Project Reports

Well, there are lots of advantages to DPR. Here are 7 key benefits of DPR and why they are must for the successful completion of any project –

By now, you must have understood that the importance pre-feasibility study, feasibility study and detailed project reports (DPRs) for the successful completion of a project is paramount. Thus, you must always hire an expert to get the job done. But if you hire an unprofessional agency, chances for loss are always on the higher side.

That’s you must not hire any agency blindfolded. Before making a final call, you must carefully analyze the experience level of the managers and the team members, the type of projects that they have handled, and their average turnaround time. If you think that they are satisfying your requirements, you can definitely hire them. Else, you should start looking for better options.

So, what are waiting for? If you have won a tender or looking for some quality ones in the domestic/ international market, then definitely get the feasibility checked by us. We have years of experience and have been helping companies win quick tenders and carry out a feasibility study for the same real quick!

To get latest tenders, RFP and other government contracts for DPR, please Click Here.

We bet our trained and experienced staff would listen to each of your requirements and address each of them with care. Call today and never lose your money on a risky project.