PM/U1 Topic 6 Difference between Pre-Feasibility and Feasibility
Difference # Pre-Feasibility Report
Objective: To determine whether the project idea needs further investigation (whether feasibility study is required or not) and what aspects of the project are critical to its viability.
Scope: An overview of the project proposal is furnished. Complete details not presented.
Type of Research: Mostly information is obtained from secondary sources and informal surveys.
Information Expected from Report: Location and site, Market, Plant capacity, Materials, Project Engineering and Technology and Equipment, Manpower, Overheads, implementation, Financial analysis, Project financing, Investment, Production costs, Commercial profitability.
Time Spent: Short duration ranging from 3 to 6 months.
Cost Involvement: Minimal.
Accuracy of Information Gathered: About 60% to 70% generally.
Difference # Feasibility Report
Objective:To determine the true profitability of the project and work on details.
Scope: Maximum coverage of the project proposal as decision is based on the economic feasibility – like technical and financial feasibility, commercial viability, organizational support, etc.
Type of Research: All types of research methodologies are followed: Primary sources including formal and informal networks are used to gather complete information.
Information Expected from Report: Location, technology, capacity, investment required, production costs, sales return on investment, debt- equity ratio, projected cash flows, cost benefit analysis, pre-operative expenses, sources of funds. Justification of assumptions and solutions obtained, complete implementation schedule with necessary charts and milestones.
Time Spent: Long-term 1 to 2 years depending on nature and complexity of project as complete information needs to be gathered.
Cost Involvement: Generally in the range of 1.5 to 3% of project value for small and medium projects and 0.5-1.5% for large projects.
Accuracy of Information Gathered: Information needs to be very accurate (90% to 95%) as decisions are based on this report.