Chapter 5 Feasibility Study

Question 1

Types of feasibility study

Answer 1

1. Technical Feasibility
2. Operational Feasibility
3. Schedule Feasibility
4. Economic Feasibility

Question 2

Why feasibility study is important?

Answer 2

• To determine whether a project has a reasonable chance of success
• To help understand whether the proposed project is feasible or not.

Question 3

When are all projects feasible?

Answer 3

When there’s no tight budgetary & time constraints

Question 4

Preliminary Investigation Overview

Answer 4

1. Understand the problem and opportunity
2. Define the project aim
3. Perform fact-finding (Interview, questionnaire)
4. Perform Feasibility Study
5. Present the recommendation to management

Question 5

Feasibility Study questions

Answer 5

OPERATIONAL - will it be easy to learn and use?
ECONOMIC - will benefits exceed costs?
TECHNICAL - Do we have the technology resources?
SCHEDULE - Can we do it in time?

Question 6

Technical Feasibility

Answer 6

• Process of determining whether the organisation has the technological resources to operate the system.

Question 7

Operational Feasibility

Answer 7

The process of accessing the degree to which proposed system solves business problems
- Using the PIECES framework to help identify business problems

Question 8

PIECES (performance, information and economy, control)

Answer 8

Performance -Does current mode going to produce high output and be more efficient?
Information - Does current mode provide end users and managers timely, accurate, and useful information
Economy - Does it provide cost-effective information/ could there be reduction in cost?
Control - Does it offer effective security control to protect the system

Question 9

PIECES (efficiency and services)

Answer 9

Efficiency - Does it make maximum use of available resources?

Services - Does current mode of operation provide reliable services?

Question 10

Schedule Feasibility

Answer 10

• Accessing the degree to which the potential time frame and completion dates meets the agreed deadlines.
• How much time is given?
• Time estimation is done using GANTT CHART

Question 11

Economic Feasibility

Answer 11

• Concludes if the project can be done within the given budget and determine the cost, benefit and profit.
  Using 2 test:
  1. Using cost benefit analysis
  2. Does the organisation have adequate cash flow (balances from the given budget).

Question 12

Cost-Benefit Analysis

Answer 12

• Process of identifying financial benefits
• Is perform when:
  a. Conduction preliminary investigation
  b. Evaluatng a project
  c. Making recommendations to
  management

Question 13

Cost Classifications

Answer 13

Tangible costs:
- costs that can be assigned with a value (salaries)
Intangible
- costs that cannot be calculated easily (customer dissatisfaction)
Direct Costs
- costs that are linked with the development of a system (purchased hardware)
Indirect Costs
- costs that cannot be contributed to the system (insurance expenses)

Question 14

Cost Classifications (fixed and Developmental)

Answer 14

Fixed Costs
- costs that are always constant and don’t depend on the level of activity (hardware rentals)
Variable Costs
- that vary depending on level of activity (printer paper, supplies)
Developmental Costs
- costs that is to be paid once usually at the time the system is developed (development cost)
Operational Costs
- costs that is paid after system is implemented (system maintenance)

Question 15

Benefit Classification

Answer 15

Positive Benefits
- benefits that are a direct result of new IS (improves services, better management)
Cost-avoidance Benefits
- expenses that would be necessary if new system is not installed
(not replacing any hardware and software)