Project Management Feasibility Studies
Usually, in Project Management Professional (PMP®) courses, the first process we meet is Develop Project Charter. PMP® students are told that the Project Charter is a document that formally authorizes the project and allows the project manager to spend money in order to achieve project goals. We also learn that the Project Charter comes into being because of a statement of work, an agreement or a business case. In the former cases, an external party has commissioned the project, but the business case is usually generated internally.
Dedicated PMP® students will read the Guide to the Project Management Body of Knowledge (PMBoK®) and learn that the business case represents the process used to determine whether the project will provide sufficient benefits to justify its costs. The need for a new project can come about because of a variety of needs. The PMBoK® offers a list containing market demand, organizational need, customer request, technological advance, legal requirement, ecological impacts and social needs. But how is the business case made?
For most project managers and even those involved in PMP® exam preparation, the business case is made for us – the Board of Directors or a Program Manager has analysed the situation and determined that we should go ahead. But how are these decisions made? Usually they come about because of a feasibility study – which, in itself, could have been a project! So, even if we are content to take business cases as read, we could be called upon someday to undertake a feasibility study project and that is the reason for this article.
Sadly, the PMBoK® does not provide much help to PMPs® embarking on a feasibility study, so we will have to look further afield. It does not take long for our research to uncover the acronym TELOS and this is extremely helpful in getting our study off the ground. TELOS stands for:
Technical / Technological: Can it be done? High-tech companies often find themselves at the leading edge of development and consider products that have never been seen before. As part of the feasibility study, prototypes and proofs of concept may be commissioned to assess their technical feasibility.
We might also use this opportunity to compare competing designs. For instance, a car company might wish to produce more economical cars and will explore alternatives, such as all-electric, hybrid and hydrogen fuel cell drivetrains.
Of course, technical feasibility might depend on more prosaic factors like the availability of the right skills in-house or the facilities needed to create the new product. So the original question – can it be done? – needs to be elaborated to: can it be done and are we in a position to do it?
Economical: When the British Motor Corporation launched the Mini back in 1959, it was delighted with its reception. The car was an amazing success, but it bankrupted the company. Why? Because the car cost more to make than they were charging for it!
Any feasibility study needs to answer the question: is it worth doing? We will need a preliminary estimate of the development costs and the likely price it will fetch in the marketplace.
An important consideration in any feasibility study is the cost-benefit analysis (as PMP® exam students will have seen in Plan Quality Management). The important aspect of this is that benefits may not be solely financial. For instance, a project to bring a product into conformance with a new regulation will not yield any financial rewards, but it will prevent the product from being removed from sale! Similarly, upgrading the underlying operating system of an IT system will only see benefits down the road in lower maintenance costs.
Legal: Obviously the proposed project should conform to the established laws of the land. In regulated industries, we need to factor in the costs of compliance with existing and likely future regulations. But a wider perspective under this heading is worth considering too. Will this project fit in with our vision of ourselves as an organization? For instance, we might be proposing a new consumer electronic but, to make it economically feasible, we need to use a sweatshop factory in the Far East. Does that fit in with our espoused values? Or, as Google maintains: “You can make money without doing evil”.
Operational / Organizational: While it might be technically possible, highly profitable and above board, we might still pass up on the opportunity because it steers us away from our core competencies. Many mergers and acquisitions fail because the two companies are too far apart in terms of focus. For instance, it might make sense for Gulfstream to buy out a helicopter manufacturer – to allow their jet customers to get home from the airport conveniently, but would there be any case for the company to get into the luxury yacht business? Probably not, as (1) Gulfstream has no background in yachts and (2) an executive jet is a tool; a yacht is for leisure activity – they require different mindsets.
Schedule: Can it be done in time? PMPs® live and die by the triple constraint, so hard deadlines are no strangers. These deadlines usually relate to a market window or a specific event. A revolutionary Easter egg is not going to sell in May and Rio 2016 Olympic merchandise will not earn a premium if it arrives on the shelves in 2017.
To determine schedule feasibility, a preliminary schedule needs to be created. The question this aspect of the study needs to answer is: what are the odds of us finishing the project by the imposed deadline?
Anyone with a certificate in project management will recognize the feasibility study as a project. We will need to assess scope (what needs to be done and can we do it?), time (develop a likely schedule), cost (how much will the project cost and what are the likely returns?), quality (what regulations will we have to conform to?), human resources (have we the people in-house to make this happen?), risk (the feasibility study is itself a risk mitigation strategy, but the process will unearth risks along the way), procurement (can we do this if we bring in outside help?) and communications/stakeholder management (we will need to get expert opinion on the technical feasibility and market information from our likely customers). In other words, being put in charge of a feasibility study should not be taken as a slight on our PMP® certification – it could be an indication that we are being considered for a role in the Program Management Office!
While feasibility studies are not part of the PMP® courses we run, a Velopi project management certification course will provide you with the know-how to manage them. Our courses are run regularly in Dublin, Cork, Limerick and Galway. To get more details, please contact us directly.
By Velopi Seamus Collins