1.1

Effective and detailed planning influences the time taken to perform any series of interrelated tasks. This is particularly true of the front‐end phase since it is always on the critical path.

1.2

Check the request for the appropriate approval authority. Idle hands in the company like to show that they are busy and create a project for themselves.

1.3

Appoint a study leader. Should this be a creative person who might get carried away by the beauty of the technology? Or, should it be someone with good project management skills but who might not have credibility with the study team? Finding someone with both sets of skills is difficult.

1.4

The feasibility phase is characterised by the need for creativity. ‘Creativity is intelligence having fun’,¹ and the plan for this phase should support this objective.

1.5

Since this is a project in its own right, the scope of the feasibility study must be defined. As part of the scope definition, identify the deliverables for the feasibility study.

1.6

One of the deliverables will be a feasibility study report. Consequently, determine the format for the report.

1.7

Assess the impact of the project relative to corporate strategy. Does the proposed project support the strategy?

1.8

Estimate the resources, budget, schedule, and effort required in order to produce the feasibility report.

1.9

Make recommendations for the internal organization of the study or for external assistance.

1.10

Obtain approval to proceed with the feasibility study and allocate a job number and cost code.

1.11

Obtain your terms of reference, or define the terms of reference of the study leader. Agree the degree and level of reporting.

1.12

Allocate roles and task responsibilities.

2.1

Failure to define the project scope at the front end is one of the most common causes for projects failing to meet their objectives, so don't be another statistic. Decide on the division of work. Break the project into its natural smaller packages. Produce a product breakdown structure. See Part IV, Section F Scope.

2.2

Develop the project specification and scope in sufficient detail in order to obtain project approval and the release of funds.

2.3

Defining the envelope of variables, within which the project is profitable, must be done precisely and comprehensively. This cannot be overstressed.

2.4

The impact of, and sensitivity to, each and every variable and combinations thereof must be calculated with the greatest accuracy possible from the available data.

3.1

The development of the project is dominated by decision‐making. Consequently, it is important to have clear project objectives that will drive this decision‐making process. This may well be fudged because of the classic conflict between cost, time, quality, and safety. See Part I, Section B Project Management Characteristics, paragraph 2.1.

3.2

The feasibility report (see Part VI, Section L Report Writing) will involve and contain most of the following:

1. Description/definition of project (see paragraph 2 above):
   1. Location and layout options.
   2. A Product and (an initial) Work Breakdown Structure, within the constraints of time and budget. Do not over‐develop the detail at this stage.
   3. Consider the need for sub‐projects.
   4. Identify deliverables for each phase.
   5. What product volumes can be expected?
   6. Is it proven technology? How reliable is the technology? Is new technology involved?
2. Reasons for the project:
   1. What would be the impact on other projects?
   2. Identification of alternatives.
3. Interfaces and stakeholders.
4. Objectives of project: (see paragraph 3.1 above.)
   1. User requirements.
   2. Cost, time, and quality.
   3. Success criteria.
5. Evaluation of design and cost data from:
   1. What is currently done?
   2. Historical reports.
   3. Preliminary surveys – ground, climatic, labour and other resources.
   4. Physical, mathematical, and financial modelling.
6. Identify the legal implications:
   1. What approvals/permits/licences are required?
   2. Statutory and planning constraints.
7. The financial model: (see Part V, Section H Financial Appraisal.)
   1. The capital cost estimate with labour costs.
   2. Net present value of the project revenue or payment terms.
   3. Rate of return on capital.
   4. Savings achieved through value management/engineering.
   5. Cost benefit analysis. What are the costs of the various alternatives?
   6. Impact of: inflation, interest rates, exchange rates and taxatio.
   7. Operating and maintenance costs.
   8. A financing plan with sources and cost of all project funds.
   9. Is the finance stable, consistent and reliable?
8. Risk Analysis: (see Part V, Section M, Risk and Risk List)
   1. Carry out a qualitative risk analysis and where possible identify quantitative data for a sensitivity analysis.
   2. Perform a stakeholder analysis as a specialised part of the risk analysis. (See Part VI, Section F Politics in Projects.)
   3. Identify management options for key risks.
9. Health and Safety issues.
10. Environmental impact/study:
    1. Impact of: inputs, process, outputs and waste.
    2. Impact of construction works.
11. Identified personnel and resource requirements:
    1. What training is required?
    2. What IT hardware is required?
    3. Is additional office space needed?
    4. What equipment and facilities are required?
12. Recommended contingencies.
13. Terms of reference for implementation phase:
    1. Frequency of internal reviews.
    2. Recommend financial approval levels.
14. Produce summary documentation:
    1. Make recommendations.
    2. Provide options.

3.3

The end of the feasibility phase is characterised by a major decision point. Whether the project should be cancelled or given the go ahead by the release of funds for the implementation phase. So, make your recommendations clear.

3.4

Make sure that the study job number and cost code are closed out regardless of the outcome of the final decision.

4.1

Provide sufficient definition of the implementation phase so as to support the project definition in 2.0 above and provide a sound basis for future project control.

4.2

Consideration should be given to making the market place aware that the proposed project is being developed.

4.3

The subjects listed below should be developed in sufficient detail to support the financial modelling but within the constraints of the agreed estimating techniques to be used.

1. Contract and sub contract strategies – the contract type for the ‘Performance of Work’:
   1. The allocation of risk.
   2. Owner involvement/effort.
   3. Contracting strategy.
2. Design Options:
   1. In house or subcontract.
   2. Own design proprietary equipment or standard catalogue equipment.
   3. Bulk supply materials or subcontract.
3. Milestone plan. Are there any constraints or deadlines?
4. Execution plan options:
   1. Cost or schedule driven.
   2. Risk management plan.
   3. Availability of resources.
   4. Construction Strategy, direct hire or subcontract.
   5. Logistics and infrastructure plans.
   6. Recommended organizational structure.
5. Quality plan.

5.1

The deliverables that are produced at the end of the study will be all those needed for the owner/client to invite competitive tenders.

5.2

Assuming that you, the contractor, have not put off the owner/client by continuously claiming for extras for investigation into additional alternatives; you might be invited to submit a tender for the execution phase.

5.3

During the development of the study the owner's/client's personnel will have been evaluating you. They will be deciding: “Can we work with this contractor?” It is, therefore, essential that the feasibility study contractor has a team of people that builds the right relationships with the owner/client.

5.4

You now have a problem. Having performed the feasibility study, you will know all of the problems, the risks and design details involved. As a consequence, your tender price will be realistic and is likely to be on the high side. The other tenderers, on the other hand, won't know the detail. Consequently, their prices might be on the low side.