Example of Feasibility Study

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FEASIBILITY STUDY A feasibility study is essentially a process for determining the viability of a proposed initiative or service and providing a framework and direction for its development and delivery. It is a process for making sound decisions and setting direction. It is also a process which: is driven by research and analysis with usually involves some form of consultation stakeholders, community, users, etc. focuses on analyzing, clarifying and resolving key issues and areas of concern or uncertainty modeling and testing. concepts and approaches.

very often involves basic of alternative

A Project Feasibility Study is an exercise that involves documenting each of the potential solutions to a particular business problem or opportunity. Feasibility Studies can be undertaken by any type of business, project or team and they are a critical part of the Project Life Cycle. When to use a Feasibility Study? The purpose of a Feasibility Study is to identify the likelihood of one or more solutions meeting the stated business requirements. In other words, if you are unsure whether your solution will deliver the outcome you want, then a Project Feasibility Study will help gain that clarity. During the Feasibility Study, a variety of 'assessment' methods are undertaken. The outcome of the Feasibility Study is a conrmed solution for implementation. Council involvement. The following are more specic circumstances that may prompt the need for a feasibility study: signicant capital investment is required. signicant City funding or public fundraising is required. signicant commitment or exclusivity of City land or building oor space and time is required. there is no clear champion nancial viability is in question (costs compared with anticipated revenues) community needs require further analysis and validation there is potential to reach a large market segment or aect a large number of people accessibility to the service is an issue (pricing barriers, physical barriers,

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Example of Feasibility Study

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discriminative social barriers, proximity, geographic equity, etc.) there is a perception of competition with existing service providers (commercial or community based) and the Citys mandate or role may be questioned there is no clear indication of the preferred method or source of delivery public safety is concerned there are signicant legislative requirements (health, safety, liability, certicationrequirements) related to the initiative which concern, impact and relate to the City there is signicant risk inherent in the service initiative (nancial, political, public liability,social, etc) the initiative entails signicant operating requirements (ie. nancial, administrative,stang, materials and supplies, skilldevelopment, customer service, training/development, etc.) Responsibility for a Feasibility Study The City may assume lead role if there is no organized proponent or organization attached to an identied need or service concept. Alternatively, the City may assist or team up with a community group or private proponent who is advocating a new community service or program. In any case, the City must be involved in the feasibility study process as a key stakeholder and provider of resources to support a service and to ensure that community needs and interests are represented accurately. Typical Contents of a Feasibility Study A typical feasibility study will: verify community needs for a proposed leisure service assess the benets and overall value of a proposed service to the community assess market conditions and trends articulate a service concept (ie. format, content, theme, objectives/outcomes) determine required resources (capital and operating) determine costs and nancing strategies (ie. Financial Analysis) review service delivery options and recommend the most eective delivery strategy. determine the Citys role and impacts (nancial, resources) in the delivery of the service produce an implementation strategy for the development and delivery of the new service

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Example of Feasibility Study

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The following summarizes typical contents of a feasibility study. The level of detail, analysis and involvement may vary depending on the nature and scale of the proposed initiative. 1. Service Concept Description Origin Conformance with City policies, goals and directions. 2. Community Benets/ Outcomes Assessment Personal Health Build strong families and healthy communities Ecological Survival Economic Generator Human Development Quality of Life Reduces self-destructive and anti-social behaviour Reduces health care, social services and police/justice costs 3. Community Needs Assessment and Market Analysis Target markets/proles (geographic/ demographic) Needs assessment (ie. product or type of service) Market supply and competition Market share goals (production or service volume goals) Trends analysis- socio-economic, demographic, environmental, recreational, etc. Short term fad or long term need? Market growth potential Impacts to current markets 4. Service Concept Development Content Format Provision Levels Criteria/Standards (ie. quality, accessibility, safety, customer service) 5. Resource Requirements Capital- land, structure, space, furnishings, xtures, equipment, computers, technological
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systems Facility provision options (rental/lease, renovations, re-using/re-adapting existing facilities, joint venture, new development) Operating- sta (administrative, instructional, supervisory/management), utilities,materials,supplies,etc. 6. Service Delivery/ Management Options Review service delivery options in light of the following criteria: Cost eciencies Accessibility Aordability Leadership capacity and commitment Public interest Liability-regulatory considerations Service quality and customer responsiveness Resource/nancing capacity Service integration and continuity 7. Financial Assessment of Preferred Options Capital expenditure projections Operating cost projections Capital and operating nancing strategiespricing, subsidy, grants, sponsorships, fundraising, etc. 8. Recommendations Preferred service delivery approach City role and impacts (ie. nancial, resources) Implementation strategy Typical Feasibility Study Process: The following summarizes a typical feasibility study process for a community leisure service: Phase 1 Project Development: Identify stakeholders, develop a steering committee, produce a terms of reference, call RFP and retain consultant if necessary, consulting services agreement, rene process timelines and milestones, develop task teams, clarify roles and responsibilities, communications plan, etc. Phase 2 Background Research: Collect data, trends analysis, market analysis, community
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Example of Feasibility Study

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demographics prole, identify issues and opportunities related to contemplated service. Phase 3 Community Consultation: Community needs assessment through focus groups, forums, surveys. Phase 4 Service Concept Development: Develop service concept and format, resource requirements, capital requirements, service delivery alternatives, nancial strategies, etc. Phase 5 Community Consultation and Market Testing: Obtain input on service concept and format, delivery alternatives, costing and pricing strategies. Focus groups, surveys, forums, etc. Phase 6 Final Recommendations: Develop nal recommendations on the service format, preferred delivery approach, City role and involvement and implementation strategy. Feasibility Study Format * Production. This category explains, among other things, the project timeline. * Marketing. Here you will address how the project will be marketed and the cost for that marketing in terms of sta hours and other resources. * Technology. Here you will describe the type of technology that will be used, along with additional technology needed for the project to be successful. * Raw Materials. Raw materials, both imported and local, that will be used during project implementation. * Utilities. This is a breakdown of the utility costs, including gas, electric, water and even telephone used during the implementation phase. * Manpower. The manpower category is a projection of the sta hours needed and the cost for compensating these employees. * Investment. Based on the items above, the investment category will outline the exact amount needed to get the project o the ground. * Protability. In this nal part of the feasibility study, you should outline your projections for when the project will turn protable, and the expected return on the investors investment. Feasibility Study Process Step 1: Review of Master Plan Findings The Master Plan Study is to be reviewed and recommendations conrmed. This is particularly relevant if the following has occurred: * re has been a considerable delay between the completion of the Master Plan Study and commencement of the Feasibility Study * Signicant change in government policy * Change in service needs/demographics * Change in site, conditions and/or changes to the Health Services / Agencys service and/or Business Plans.
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Example of Feasibility Study

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* If any amendments to the Master Plan Study are to be incorporated into the Feasibility Study they must be clearly identied, including reasons for the changes endorsed by the Project Control Group and approved by the Department. Step 2: Analysis of Functional Brief The consultant analyses the Functional Brief, refer to the Master Plan Studies Guideline to ensure that the services to be provided and the manner in which they are to be delivered is completely understood. The analysis will require a comprehensive appreciation of the functional requirements and relationships of the various programs and activities, functional relationship diagrams and identication of key functional needs. The Functional Brief should be the source of this information. Should the consultant require additional information or clarication, the PCG should be notied immediately and requested to provide the appropriate response. The Functional Brief may need to be rened/conrmed following this analysis phase and the nal form should be endorsed by the PCG prior to proceeding to the next phase. Step 3: Area Allocation Model An area allocation model incorporating the space utilisation analysis should be undertaken, including frequency of use and potential for multiple uses between programs. Refer to the gure, Example of an Area Allocation Model. Step 4: Conrmation of Site Inuences The consultant should investigate and conrm relevant information on site and location issues, which may impact on development options. These include: * Access * Public Transportation Services * Topography * Site services * Authority requirements * Planning Schemes and Requirements * Existing buildings * Orientation * Views * Adjoining developments & easements. Step 5: Identication of Viable Development Options A number of viable operational and detailed physical planning options should be identied. These options should be based on the Master Plan Study outcomes and other information. The options should be developed to such a level of detail to enable a full comparison. The level of information for each option should include: * Concept site and oor plans * Impact statement on site and engineering services * Site conditions and existing buildings
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* If appropriate, the potential to incorporate existing buildings giving due consideration to the existing building condition/fabric survey recommendations * Construction implications * Staged works. Step 6: Evaluation of Options An evaluation of each option is to be undertaken, including a full assessment of: * Operational eciencies * Physical planning benets * Capital costs * Life cycle costs * Recurrent costs * Future developments * Asset maintenance and disposal potential * Accessibility * Quality of service delivery * Construction implications * Implementation program * Staging of works/disruption to services * Risks associated with the project. The option evaluation recommends the preferred option(s) and also provides a detailed justication. PCG approval is required prior to the renement of the preferred option(s). Step 7: The Report A Feasibility Study report is to be prepared which documents the nding and outcomes of Steps 1 to 6 and also incorporates the following information: * Executive Summary - summation of the project objectives, key issues and recommendations on a maximum of 2-3 pages * Conditions Brief and Design Summary - Summary of existing building conditions, Functional and Design Brief Requirements and the design philosophy * Conrmation of preferred site * Options - drawings and statements on all options identied clearly outlining the preferred option * Full Scope of Works - describe all additional works which may be associated with the development of the preferred option(s) including: * Major works * Site and engineering services * Landscaping * Construction staging costs * Temporary accommodation * Hazardous material (e.g. Asbestos) removal * Demolition * Soil contamination removal * Fire safety * Impact on support services
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Example of Feasibility Study

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* Equipment * Heritage issues. * Capital Costs - a Cost Plan B must be developed for the preferred option. It will be prepared on an elemental basis by a Quantity Surveyor. It should comprise all costs associated with the project including: * Asset acquisition * Building works * External works and services * Building services * Construction staging costs * ESD and infrastructure costs * Furniture/equipment * Special equipment * Fees * Contingency allowances * Special factors * Locality allowance * Delay allowance for escalation and rise and fall * Asset realisation * Commissioning costs. * Recurrent Costs - a statement of the recurrent cost implications of the preferred option, including both operational and asset costs: * Operational * Stang * Vehicles * Support services * Other ancillary operating costs. * Assets * Temporary accommodation/services * Energy * Maintenance * Commissioning costs. * Drawings - development plans of all options being considered and renement of the preferred option(s) to concept plan level. (On small simple projects scale 1:100, on other projects scale 1:200. Drawings should clearly identify the scope of new and refurbished works, future expansion, surplus assets and staging of works) * Implementation Program - develop a proposed timetable for implementation of the project including staging of works, and associated cash ow projection that incorporates any time constraints, which may be imposed by associated works or other relevant factors such as approval processes. (Note: the approval process varies for projects procured under Partnerships Victoria) * Procurement Method - provide a preliminary statement of the preferred procurement methods considered applicable for the project (e.g. traditional
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lump sum, construction management, design and construct) * Analysis and Evaluation The report should provide an analysis and assessment of all viable options. The evaluation process should outline the criteria for assessment and the justication for the preferred option should be clearly articulated * Strategic Business Case - The Feasibility Study report will provide a summary of the outcomes of The Strategic Business Case. * Preliminary Business Case - Undertaken following the completion of the Schematic Design, however, there may be circumstances necessitating the preparation of this Report following the completion of the Feasibility Study phase. The requirements of the Preliminary Business Case Report are as outlined in the Department of Treasury & Finance website under the Gateway heading.

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