Project Feasibility in Construction Management

Project Feasibility in
Construction Management
Ar. Sayan Munshi
ASAPK, AUK, Kolkata

Project Feasibility
A feasibility study is a thorough analysis of all important
components of a proposed project in order to assess its technical
viability, economic feasibility, and chances of success.
Construction industry projects
are capital-intensive and often
require millions of dollars.
Before spending such an
enormous amount, lenders
and project owners need to
be confident of the project’s
success and financial returns.

Project Feasibility
It is a set of exploratory
investigations conducted in the
early stages of a project to address
and clear up issues and difficulties
that might impact the scope and
outcomes of the proposed project.
Companies often conduct a pre-
feasibility study (PFS) before a feasibility
assessment. A pre-feasibility study is a
preliminary study that analyzes,
determines, and selects the best
business scenario, assuming multiple
business scenarios exist. PFS identifies
the best scenario from both technical
and financial standpoints.

Project Feasibility
A feasibility study of a construction project is intended to assist project
owners/prospective investors in determining whether a proposed project or
investment is likely to succeed.
For a large infrastructure project, there
might be multiple feasibility studies. This is
because large-scale projects have various
aspects to consider before going ahead with
the final investment decision.
Environmental Impact Assessment
Regulatory approval
Project cost
Not all feasibility studies are the same. Every project and every industry has its own way of
conducting feasibility studies. Even within the same industry, the study varies when the project scope
and operational demands change. In some instances, there might be numerous feasibility studies
before the project starts.

Type of feasibility studies
1. Comprehensive Feasibility
• A comprehensive feasibility study is a
complete feasibility report that takes
into account some of the most rational
business practices that should be
implemented before beginning any
project.
• The comprehensive feasibility report
includes information on land
acquisitions, real estate difficulties,
and the economic and cultural
influence on the surrounding areas.
Example:
 Evaluation of alternative land-use plans,
structure of a building and Architectural
design alternatives, soil analysis, utility
availability (Services), etc.;
 Financial analysis of the project, including
assessment of financing alternatives, tax
shelter planning, cash-flow forecasting,
rate-of-return analysis, capital budgeting
analysis, cost-benefit analyses, and
holding-period analysis.

2. Economic Feasibility Analysis
• When a corporation needs to
determine if the projected amount of
money and funding is sufficient to
finish a project successfully, it
conducts an economic feasibility study.
• While a business plan may include a
"CBA" or cost-benefit analysis section,
an economic feasibility study will be
more extensive and include more
figures and numbers in the financials.
Example:
 A company considering launching a new
product line. The company would conduct
an analysis to determine the costs of
developing and producing the new
products, as well as the projected
revenue from sales. They would also
consider factors such as the size of the
market for the new products, the level of
competition, and the target audience.

3. Technical Feasibility Analysis
• The technical feasibility study of a
planned construction project
determines if it can be completed
without technical concerns.
• The size of the project site, vital access
to the area, land topography,
geotechnical information, flooding
concerns, existing facilities or
structures on the site, and other
environmental factors are considered
in this element of feasibility.
• Following the assessment of these
factors, the consultants must examine
the availability of materials, personnel,
resources, and other practical
requirements for the project.

4. Legal Feasibility Analysis
• The feasibility assessment includes a
section on a legal feasibility study,
which discusses the legality of the
proposed construction project.
• Legal feasibility ensures that a project
will be built in accordance with current
legal state requirements and
conditions. It ensures that the project
is free of issues with planning
authorization, land ownership
/easements, and taxation.
Example:
 laws that may restrict foreign investment
in a jurisdiction
 Any requirements that transactions are to
be carried out at fair market value
 Any valuations required as a matter of law
or prudent practice
 Maintenance of share capital rules that
may apply, and/or whether any capital
reduction may need to be carried out
 Constitutional documents of an entity
that may need to be amended to allow
for the intended transactions

5. Operational Feasibility Analysis
• The operational feasibility study of a
project determines if the suggested
strategy for the project can solve any
potential challenges and achieve the
set goals.
• This element of the feasibility study
examines the overall project to ensure
that the finished property can fulfill its
intended function.
• Once completed, a school, for example,
should be able to function optimally.
The same should be true for homes,
hospitals, and other facilities.
Example:
 Imagine a large Tile manufacturing
chain planning to implement an AI-
driven inventory management system.
The feasibility assessment would
involve evaluating how well this system
integrates with the company's existing
supply chain processes and whether
employees can adapt to the new
technology seamlessly.

6. Scheduling Feasibility Analysis
• The scheduling feasibility study is the last part of a feasibility assessment in the
construction sector.
• It primarily calculates the time required to accomplish the job.
• Consultants would normally look at the overall design, materials, risk areas, and laws to
see whether any of these elements could affect the project's overall timing.
• This component of feasibility evaluates the overall number of months or years required
to execute a project while maintaining its quality.

Feasibility study report
A feasibility study report is a strategic brief of the findings of a feasibility study analysis.
The feasibility report usually includes the following elements:
 An executive summary
 A detailed description of the feasibility
study services
 Technical considerations
 The marketplace
 Marketing strategy
 Organization
 Schedule
 Financial projections/ Cost Estimates
 Geotechnical studies
 Recommendations
For some projects, some additional
information might be included in the
feasibility project report:
• Planning permissions (Legal &
statutory approvals)
• Detailed budget analysis (based on
client’s requirements)
• Alternate solutions
• Site assessment
• Operational and maintenance
assessment
• Consultation with other stakeholder
statutory authorities
• Additional site appraisals
DPR Housing Board.pdf

Project Feasibility in Construction Management

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