A feasibility study or engineering study is a key activity that should be carried out early in the project process if a successful project outcome is to be achieved. Its purpose primarily should be to determine the viability of a project but critically it will also contain the high-level cost element of the project e.g. ±20%. This cost will form the basis for capital approval and ultimately (with further refinement) will become the budget for the project.
Recognising the importance and significance of the study, we will engage with the client at an early stage to understand the key drivers for the project. This is also an opportunity to challenge assumptions, evaluate risk and test the technical solution. The study could include preliminary design, surveys, supplier evaluation, cost preparation, operational evaluation and simulation modelling. Our objective is to produce a report that summarises the project, draws conclusions about the technical solution and provides an outline cost structure.
The feasibility study could cover a number of factors (or ‘tests for viability’) depending on the nature and complexity of the project. Technical and financial/economic factors are probably going to be pretty high up the list: can it be done and what is the cost/payback period (return on investment)? Time is another key factor; there may be key commercial milestones (e.g. product launch) that have to be considered, so can the project be scheduled accordingly (this may also affect the technical solution and cost)? Other factors should also include risk assessments, safety assessments and operational assessments.
Nevertheless, on many occasions we have seen this activity dramatically reduced in content and even missed out completely. Seen not as an integral part of the project process but as an unnecessary ‘additional cost’. The result sadly, quite often leads to many unforeseen factors revealing themselves as the project progresses through further stages of implementation, installation, etc. The outcome inevitably is therefore additional cost, extended timescales and compromised scope.
This is not a good situation so our message is: FEASIBILITY STUDY FIRST.