An essential component of this unit’s reading was the discussion of feasibility analyses. Feasibility analyses, when conducted correctly, save enterprises time, money, and resources by determining if a solution is both practical and capable of being achieved within certain budget and schedule requirements. These studies include the following six elements: project scope, current analysis, requirements, approach, evaluation, and review. One extremely important component of this study is the current analysis. The current analysis defines the current system using strengths and weaknesses, and determines whether the current system is working correctly, needs minor modifications, or should be completely upgraded or replaced. This is essential when deciding to proceed with a project or not, as it may be cheaper and easier to modify a current system rather than introduce an entirely new one. This can often be lost among project managers and IT personnel who are exploring new projects, as it is easy to lose sight of the present as you look to the future. Therefore, it is important for those handling projects to conduct quality feasibility studies to ensure the enterprise is optimizing its time and resources when analyzing projects. I think this is a great way to add perspective in project selection by forcing personnel to ask the question, “Do we really need this?”.
Small organization or those without formal project management practices or functions probably overlook a lot of what was in this chapter. But really, planning is possibly the most important aspect of any of these projects. Organizations have to know what they’re getting into. Afterall. it’s better to spend $10,000 researching the feasibility of a project than to discover a year and $60 million into the project that it’s not going to work or doesn’t fulfill all the objectives. One important aspect of these analyses is looking at the impact over time, not just the short term. Maintaining an existing system might be cheaper this year, but might have more costs over the next 5 years than getting a new one.
Hi Jonathan,
I agree with you that planning is the most importance aspect of any project. Organizations need to consider whether their project is economically feasible? Some of the steps they should consider are:
1. Conduct preliminary analysis
2. Prepare a project income statement
3. Conduct market survey
4. Plan the organizational structure
5. Prepare opening day balance of projected expenses and revenue
6. Review and analyze the points of vulnerability
7. Decide whether to move forward with the project
https://corporatefinanceinstitute.com/resources/knowledge/other/feasibility-study/
The important point in this week’s reading is that assessing project feasibility is a required activity for all information systems projects. Feasibility analysis is the process to confirm that a project is possible and makes sense. It can be used to validate assumptions, constraints, decisions, etc. Some common types of feasibility analysis are economic, technical, operational, scheduling, legal, and political. The specifics of a project will decide which factors are important. If we consider economic feasibility it is important to ask is this project/plan economically feasible? Economic feasibility identifies financial benefits and costs associated with the development project. The feasibility can be assessed based on different factors such as projected profitability, total cost of completion, etc. Although during the planning phase of the project it is not possible to identify all benefits and costs, but it is important to identify and quantify these items to get an adequate economic analysis.
An important take away that I found interesting in this week’s reading was regarding feasibility analysis. For me, feasibility analysis factors in the technical, economic, legal, and the likelihood of completing the project successfully. According to the CISA manual, feasibility analysis usually includes six elements:
1) Project Scope:
2) Current Analysis:
3) Requirements:
4) Approach:
5) Evaluation:
6) Review:
Feasibility analysis basically asks, “Why should this project be undertaken or continued”. I also thought that it was interesting to note that at any stage the business case is thought to no longer be valid, then the project sponsor or IT steering committee should consider whether the project should continue use the organization’s resources.
Hi Elias….
I agree with your assessment that it is interesting that at any time, the project could be determined not valid. I’ve watched project teams struggle with delivering the value that the initial feasibility study concluded would benefit the organization. Many times it is because in the planning phase of the project the true technical implementers get involved and determine whether the initial project assumptions are valid. Their assessment of what it will take to implement the requirements usually differs from the initial feasibility assessment. Then the project needs to return through a tollgate to either ask for an upper of cost or for a modified solution that may or may not meet the initial requirements.
The reading covers the identification and selection of IT projects and then the initiation and planning phase of IT projects. What I found interesting are the various methods or criteria that could be used for as evaluation criteria for a project as I have really only used value chain analysis as the primary criteria for project selection. Value chain analysis or cost benefit analysis pits the benefits of moving forward with an IT project against the potential costs to determine the return on investment and how long a project will take before the benefits exceed the costs. Other evaluation criteria are strategic alignment where a project is evaluated based on its ability to help the organization achieve strategic objectives. Potential benefits are also a criteria that can be used and is actually a piece of the cost benefit analysis. Resource availability is a criteria where the amount and type of resources required to complete the project versus the availability of the resources. Project size and duration looks at how many resources are needed and for how long. Finally, technical difficulty or risks are an evaluation criteria that decision makers can use to ensure that the risks of the project are minimized.
In this week’s reading, it is significant to understand how to select a useful project that can achieve the business goal. Before selecting the project, the project manager knows the current organizational environment, so he or she can identify the potential development projects, classify and rank IS development projects, and select the project. First, the project manager considers the project cost, duration, complexity, and risk, and the manager can estimate what resources will be allocated to the project. In addition, the IS development team can help the project team to classify and rank the project by evaluating the value chain, risk assessment, and strategic alignment. In doing so, the project team should be able to select an appropriate project as a short-term or long-term. The relevance of the project should change as the business conditions fluctuate. Once the project has been accepted, the teams should be able to handle any potential risks during the development.
Hi Cami,
I agree the relevance of the project should go as the needs of the business go. Its one of the important things to keep in mind while planning for the project. Things can and often do change but with proper planning I agree the teams should be able to handle any potential risks that come up during development.
In this weeks reading what stands out for me is how critical the Feasibility Analysis is to the project. No matter how big or small the company/business/operation is, the question will come up, should we explore this project, will it make operations better? If the answer to that question is yes, then the next question will become is the project doable? From that point the Feasibility Analysis comes into play, the reading taught us there are six parts to the Feasibility Analysis.
1. The project scope: The first step is to clearly define the business problem/opportunity that has to be addressed.
2. The current analysis: This form of analysis is used to evaluate the current method of implementation
3. The requirements: Used to define the requirements depending on the objective of the project.
4. The approach: You will next have to choose the recommended solution or course of action to meet your requirements.
5. Evaluation: This element will examine the cost effectiveness of the selected approach and the estimated total cost of the project.
6. Review: All the above elements will be assembled into a feasibility study and a formal review will be conducted.
The Feasibility Analysis is critical to any project but at the same time a very common sense step, my take away is it does not have to be exactly the same in each and every scenario but gives us more of a general basis that should be applied to all projects.
The feasibility analysis is based on the main content and supporting conditions of the project, such as market demand, resource supply, construction scale, process route, equipment selection, environmental impact, fundraising, profitability, etc., from the aspects of technology, economy, and engineering. Investigate, analyze and compare, and predict the possible financial, economic benefits. Social-environmental impacts of the project after completion, to propose advisory opinions on whether the project is worth investing in and how to construct it, providing a comprehensive basis for project decision-making System analysis method. Feasibility analysis should have the characteristics of foresight, fairness, reliability, and science.
For this week’s reading, I interesting in the Feasibility Analysis is to the project. A feasibility study is simply an assessment of the practicality of a proposed plan or project. As the name implies, these studies ask: Is this project feasible? Do we have the people, tools, technology, and resources necessary for this project to succeed? Will the project get us the return on investment (ROI) that we need and expect?
The goals of feasibility studies are as follows:
To understand thoroughly all aspects of a project, concept, or plan
To become aware of any potential problems that could occur while implementing the project
To determine if, after considering all significant factors, the project is viable—that is, worth undertaking
Feasibility studies are important to business development. They can allow a business to address where and how it will operate. They can also identify potential obstacles that may impede its operations and recognize the amount of funding it will need to get the business up and running. Feasibility studies aim for marketing strategies that could help convince investors or banks that investing in a particular project or business is a wise choice.
Yes, as IS auditors we need to be concerned with the feasibility studies aspect of SDLC. Our role is to ensure that decisions were reached in an unbiased and effective manner. We should be able to examine the output of the studies and the return on investments. The ROI goals should be met after the studies and if this is not the case then we can acknowledge that there is gap in the approach. A number of things should be done to coming to a conclusion on the study. As Auditors we should review and evaluate the criticality of the system, determine if the solution can be met with the existing system, determine the reasonableness of the chosen solution based on strengths and weaknesses, determine if the cost justifications are measurable and can be verified, the examine the document to ensure reasonableness and objectivity in its conclusions.