Project Feasibility Study

Dr. Attia H. Gomaa

Head of Industrial Eng. Dept.
Fayoum University
attiagomaa@yahoo.com


2006
Cost
Features
Schedule
Quality Staff
Project Framework
Pilot run
and final tests
New product or
service launch
Final design
& process plans
Idea
generation
Feasibility
study
Product or
service concept
Performance
specifications
Functional
design
Form design
Production
design
Revising and testing
prototypes
Design
specifications
Manufacturing
or delivery
specifications
Suppliers
R&D
Customers
Marketing Competitors
Project Stages
Project Stages
1. Idea Generation - Product Concept
2. Feasibility Study - Performance Specifications
3. Preliminary Design - Prototype
4. Final Design - Final Design Specifications
5. Process Planning - Manufacturing Specifications
6. Implementation
7. Operations & Maintenance
8. Project Closeout
Project Stages
No
Idea
generation
Final
design
Preliminary
design
Feasibility
study
Process
planning
Product
feasible?
Yes
Prototype
Manufacturing
Design & Manufacturing
Specifications
The Design Process
Project Stages (General)
Project execution
Design
Implementation
Validation
Conclusion
S0 S1 S3 S4 S5
MS MS MS MS MS MS
S2
MS MS
Support
Feasibility
study
Prestudy
Definition phase
Execution phase
Start End
Process defined Process refined
Implementation Feasibility
Building consensus and consultation
Main events
Prestudy Feasibility
Study
S0 S1 S3 S4 S5
MS MS MS MS MS MS MS
S2
Design Implementation
& Verification
Pilot &
Validation
Conclusion
Idea is
defined
Main
requirements are
collected.
Project is planned
Resources are allocated
Cost-Benefit-Analysis is made
Product owner exists
Production
is planned
Ready for
piloting
Ready for
release
MS
Conclusion
Ready for
integration
Ready for
system testing
Different views of requirements


Problem
Features
Needs
System requirements
Software requirements
Solution
?
PROJECT
b
e
g
i
n
n
i
n
g
e
n
d
FEASIBILITY
STUDY
Yes
No
Reconsider
WHAT IS A FEASIBILITY STUDY?


Feasibility study is a powerful systematic
methodology of the feasibility of a proposed
project, as a basis for deciding whether it should
proceed or otherwise.
The Feasibility Study
Brainstorming could be used to generate
many ideas for scenarios.
Pre-study:
Scope
Requirements
Targets
Constraints
Feasibility study
Feasibility Study Factors
Major five factors:
Social
Technological
Environmental
Economic
Political
Hard factors
quantities and facts
Soft factors
holistic representation
e.g. rich picture
Feasibility Study
Project
Planning
Technical
Study
Environmental
Study
Marketing
Study
Economical
Study
Market study: - 1
Customers types
Customers needs
Water quality
Quantity rates
Water supply
Price rates

2- Technical study:
Engineering design
Equipment types
International standards
Cost estimation
Environmental study: - 3
Environmental needs

4- Economical and financial
study:
Economic analysis
Sensitivity Analysis
Risk analysis

5- Project planning:
Project target plans
Improvements
recommendations
Feasibility study for water station project:
Feasibility Study
1. Where to start ?
2. What to do ?
3. Who does what ?
4. What are the results ?

5. Prototypes
1. Where to start ?
Before FS After FS
2. What to do ?
Before FS After FS
3. Who does what ?
Before FS After FS
4. What are the results ?
Before FS After FS
5. Prototypes
Idea Generation Sources
Companys own R&D
department
Customer complaints
or suggestions
Marketing research
Suppliers
Salespersons in the
field
Factory workers
New technological
developments
Competitors
Perceptual Maps
Visual comparison of
customer perceptions
Benchmarking
Comparing product/service
against best-in-class
Reverse engineering
Dismantling competitors product to
improve your own product
Idea Generation Sources (cont.)
Feasibility studies:
Technical feasibility - can we do it?
Social feasibility - do we want it?
Economic feasibility - can we afford it?
Operational feasibility - can we handle it?

Feasibility studies:
are quantitative and qualitative
evaluate costs and benefits
are retrospective (historical) and projective (futuristic)

Remember:
state assumptions
use graphics
visit sites and photograph
TECHNICAL FEASIBILITY

Can we do this project?
Is the technology available to make it work?
Is it possible to achieve the proposal within the
performance criteria?
Are there sufficient skilled technologists
available to staff this project?
Does the technology already exist within the
company so that the proposed tasks are already
done and we do not need this project?
Systems Development
Concepts
Method
a prescribed set of tasks that uses specific
techniques and tools to complete a systems
development activity
Technique
a way of doing a particular task in the systems
development process
Tool
automated tools to help systems development
Methodology
a collection of procedures, techniques, tools
and documentation aids which assist
systems developers to implement
information systems
consists of phases which consist of sub-
phases
helps developers plan, manage, control and
evaluate information systems projects
Avison and Fitzgerald (1995)
Systems Development
Concepts
SOCIAL FEASIBILITY

Do we want this project?
What are the repercussions and impacts on
people in and outside the company?
Will the proposal influence working practices in a
favourable way and improve working conditions
for employees?
Are there costs to the environment, to society, to
company culture?

ECONOMIC FEASIBILITY


Can we afford this project?
How much will this project cost financially?
Do the benefits balance the capital outlay?
Over what period will we pay back that outlay
and make a profit?
We would estimate the financial cost, consider
the benefits, and analyse the balance in a
cost/benefit analysis using tried and tested
accountancy methods.

OPERATIONAL FEASIBILITY


Can we handle the outcome of this project?
Will the company cope with resulting change?
Do we have or will we be able to obtain the
resources to make the end-product worthwhile in
the future?
Or is the company content with the current
position?
Will the company be able to retrain/redistribute
existing staff or recruit additional personnel?
Cost Estimation
Cost) l (Historica Cost Future f =
The Cost Estimating Process
Definition &
Planning
Data
Collection
Estimate
Formation
Review &
Presentation
Final
Document
Make-or-Buy Decision
Alternatives Differential

Make Buy Cost to Make

Rental of equip. $15,000 ---- $15,000
Direct materials 5,000 ---- 5,000
Direct labor 24,000 ---- 24,000
Variable overhead 9,000 ---- 9,000
Purchase cost $66,000 ($66,000)
Relevant costs $53,000 $66,000 ($13,000)
====== ====== ======
Decision: Manufacture parts in-house
Keep-or-Drop
Differential
Keep Drop Amount to Keep
Sales $150,000 ---- $150,000
Variable expenses (67,500) ---- (67,500)
Contribution margin $ 82,500 ---- $ 82,500
Direct fixed expenses (85,000) ---- (85,000)
Relevant benefit/loss $ (2,500)
======
Decision: Drop the Deluxe product line but investigate alternative
use of facilities. This analysis provides a benchmark for future
decisions.
Special-Order Decisions
Assume the following price quotation sheet for the XYX Company who
has received an offer buy at $38 per unit.

Direct materials $12
Direct labor 14
Variable overhead 4
Variable selling and administrative 2
Fixed manufacturing 20
Total $52
Markup--50% 26
Target selling price $78
===
Important: XYZ Company has idle capacity and can produce the
special order without affecting its current production.

Economic Feasibility Study

WIP/DIP
Cost Analysis
Example
Capital Costs Vendor 1 Vendor 2
Application Software Licensing $ 2,099,522 $ 1,007,551
Interface Development 135,000 20,000
Vendor Services 398,400 159,310
System/OS and Hardware Costs 1,206,362 1,411,757
Capital Costs Subtotal $ 3,839,284 $ 2,598,618
5-Year Operating Expenses
Application Software $ 1,889,930 $ 1,019,073
Interfaces 111,600 23,852
System/OS and Hardware Costs 260,091 286,551
Operating Expenses Subtotal $ 2,261,621 $ 1,329,476
TOTAL 5-YEAR COSTS $ 6,100,905 $ 3,928,094
Results
Case Study
Year 1 Year 2 Year 3 Year 4
Cost $1,000,000 $200,000 $200,000 $200,000
Benefit 100,000 150,000 250,000 350,000
Difference $(900,000) $(50,000) $ 50,000 $150,000
Net Present Value Example
Year in the Life of the Project
$(250,000) $125,000 $130,000 $115,000
0 1 2 3
Net initial
investment
Annual cash
inflows
Net Present Value Example
Net Cash NPV of Net
Year 10% Col. Inflows Cash Inflows
1 0.909 $125,000 $113,625
2 0.826 130,000 107,380
3 0.751 115,000 86,365
Total PV of net cash inflows $307,370
Net initial investment 250,000
Net present value of project $ 57,370
Net Present Value Example
The company is considering another investment.
Initial investment is $245,000.
Investment in working capital is $5,000.
Working capital will be recovered.
Useful life is three years.
Estimated residual value is $4,000.
Net cash savings is $80,000 per year.
Expected return is 10%.
Net Present Value Example
Net Cash NPV of Net
Years 10% Col. Inflows Cash Inflows
1-3 2.487 $80,000 $198,960
3 0.751 9,000 6,759
Total PV of net cash inflows $205,719
Net initial investment 250,000
Net present value of project ($ 44,281)
FOR WHAT IS A FEASIBILITY STUDY USED?

Feasibility studies may be used for a variety of purposes, such as:

testing and comparing the viability of proposals




approaching financial institutions for project funding




examining the original brief in detail, prompting discussions of client objectives and the
cost implications of various project options, as well as uncovering conflicts and issues so
that they may be resolved.
return on investment > return on alternative investments
revenues > mortgage payments + operation costs
Economic Feasibility
Should We Build It?
Identify costs and benefits
Assign values to costs and benefits
Determine cash flow
Assess financial viability
Net present value (NPV)
Return on investment (ROI)
Break even point (BEP)
ECONOMIC FEASIBILITY
Example
Costs to develop, maintain and operate
Benefits when operational
Break-Even point (Costs = Benefits)
HOW IS PROJECT FEASIBILITY ASSESSED?

1. Identify project costs and benefits








2. Make assumptions about the project and future economic conditions
Costs:
Land
Consultants
Construction
Environmental, social,
cultural, political
Risk
Interest on capital
expenditure
Benefits:
Superior design outcomes
Creation of magnet
Socio-cultural diversity
Eco-solution
Social or cultural capital
Higher return on investment
Expected Value
Costs Benefits
Tangible
Intangible
*
*
*

*
*
*
*
*
*

*
*
*
Tangible vs. Intangible Costs
Tangible Costs Includes revenue that the
system enables the organization to collect, such
as increased sales.
Intangible Costs Are base on intuition and
belief rather than hard numbers.
Assign Cost and Benefit Values
Difficult, but essential to estimate
Work with people who are most familiar
with the area to develop estimates
Intangibles should also be quantified
If intangibles cannot be quantified, list and
include as part of supporting material
Profit
The purpose of Product Development is to produce a good
or service that a customer will pay a sufficient price for to
assure a profit.
Gross Profit=Price - Direct Cost
Net Profit= Gross profit - allocated expenses
To assure a profit, companies act to produce products that
can command the highest prices and cost the least to make
Any exceptions?
What other product issues drive companies
besides profits?
Valuation
Future earnings
Products in the pipeline
Acquisition potential
Strategic fit of products with another company
Previous sales of equivalent company (comparables)
Break-up potential
Value of a conglomerate as the sum of its parts
Tax consequences
Etc.
Cash Flow
Required for business continuity
To pay expenses
To pay interest on debt
To pay dividends to stockholders
To grow business
To invest in new programs, technologies
Equipment
Inventory and Receivables
Acquisitions etc.
Best measure of financial performance
Used by Wall Street




What other product issues drive companies
besides profits?
What other product issues drive companies
besides profits?
Investment Alternatives
The object is to take capital earned, borrowed
or from investors and allocate it in a fashion
that earns the highest return for the
shareholders of the company.
There needs to be an appropriate balance of
long and short term returns.
More complex and as simple as a matter of
dollars and cents.
Question:
What are some investment alternatives for a company?
What are typical investment alternatives. . .
Invest in
product line a or product line b
Advertising
Information Systems
A new factory
Buy-back companies stock
Acquisition
Employee bonus or salary raise
Hire more HR personnel
etc.,etc.

The Criteria is:
Which investment(s) gives the highest return?
Determine Cash Flow:
Assign Values to Costs and Benefits
Simple Cash Flow Method
Assess Financial Viability
Net Present Value
NPV = PV(future cash inflows)
PV(future cash outflows)

PV = Cash flow amount
(1 + interest rate)
n
, where
interest rate = required return
n = number of years in future
Determine NPV
If NPV >= 0,

Project is OK
If NPV < 0,

Project is
unacceptable
Assess Financial Viability
Return on Investment
ROI = NPV
PV(cash outflows)
Cash Flow Method for Cost Benefit Analysis


Total (benefits - costs)

Return on Investment Calculation
Total costs
RETURN ON INVESTMENT EQUALS
Divided by
Net Present Value Calculation
(1 + interest rate)
n

Some amount of money
NET PRESENT VALUE EQUALS
Divided by
Where n equals the number of periods
Net Present Value of an Investment
Holds for all investments
Takes into account inflation, cost of
capital, corporate expectations of return
Reduces all times to a common point
Calculation of Net Present Value
( )

=
+
=
n
t
t
t
k
A
NPV
0
1

Where k is the expected rate of return
A sub t is the cash flow in the period t
Choose the programs whose NPV is
highest consistent with strategy, risk,
resource, etc.
Calculation of Payback Period
( )
0
1
0
=
(

=
n
t
t
t
r
A
Where r = discount rate
is the cash flow in period t


t
A
t
A
t
A
Preparing an economic
feasibility study
Compare product Returns on Investment
example: Sample business plan pro forma

Dollars



Time
(Years)

To calculate NPV, first assume a cash flow
-4000
-2000
0
2000
4000
6000
8000
10000
1 2 3 4 5 6 7 8 9 10 11 12
Time (Years)
Cash
Flow
Calculation of NPV and Payback Period of an
investment
Year Cash Discounted Cash Flow Discount rate
1 -1000 (909) $ (909) $ 10%
2 -2000 (1,653) $ (2,562) $
3 -3000 (2,254) $ (4,816) $
4 -1000 (683) $ (5,499) $
5 0 - $ (5,499) $
6 1000 564 $ (4,934) $
7 2000 1,026 $ (3,908) $
8 6000 2,799 $ (1,109) $
9 10000 4,241 $ 3,132 $
10 5000 1,928 $ 5,060 $
11 2000 701 $ 5,761 $
12 2000 637 $ 6,398 $
Net Present Value= 6,398 $
Payback 9 years
Assume all cash is spent at end of perid
- $
Calculation of NPV and Payback Period of an
investment
Year Cash Discounted Cash Flow Discount rate
1 -1000 (769) $ (769) $ 30%
2 -2000 (1,183) $ (1,953) $
3 -3000 (1,365) $ (3,318) $
4 -1000 (350) $ (3,668) $
5 0 - $ (3,668) $
6 1000 207 $ (3,461) $
7 2000 319 $ (3,142) $
8 6000 736 $ (2,407) $
9 10000 943 $ (1,464) $
10 5000 363 $ (1,101) $
11 2000 112 $ (990) $
12 2000 86 $ (904) $
Net Present Value= (904) $
Payback never breaks even
Assume all cash is spent at end of period
Calculation of Internal Rate of Return (IRR) for
a project
Calculate a discount rate (k) that reduces
the NPV of a project to zero
( )

=
+
= =
n
t
t
t
k
A
NPV
0
1
0
Calculation of Internal Rate of Return IRR) of an
investment
-1000
-500
0
500
1000
1500
20 21 22 23 24 25 26 27 28 29
NPV($) Vs
Discount Rate
(%)
IRR=24.3%

Assess Financial Viability
Break Even Point
How long before the projects returns
match the amount invested
The longer it takes to break even, the
higher the projects risk.
Value analysis (VA)
Can we do without it?
Does it do more than is required?
Does it cost more than it is worth?
Can something else do a better job?
Can it be made by
a less costly method?
with less costly tooling?
with less costly material?
Can it be made cheaper, better, or faster by
someone else?
Sensitivity Analysis
Reduce (Increase) Price
Change Product Development Time
Consider competitive response

Some thoughts on how to increase
profits
P=SP-C
1. Increase Selling Price
Increase Customer Value
Put extra features in product which require little marginal cost
Provide extra service
Target less competitive segment of the market
Get to market before competition
Price at the maximum the customer is willing to pay
Price models should reflect customer value- not cost
(except in government contracts if you wish to avoid jail


Note in English gardening magazine: Even though seed sales are
at an all time high, the price is not expected to come down
Why?
Some thoughts on how to increase
profits
P=SP-C
2. Decrease Selling Price
Do it right the first time
Dont commit to detailed design until you have customers specs firm
then dont change
Build a manufacturable product. Bring manufacturing in early
Dont overload with features that the customer doesnt want that are
costly to develop
Manage tightly to schedule with appropriate risk and risk reduction
plans
Use rigid phase exit criteria

All of these consistent with Fast C/T
Some thoughts on how to increase profits
P=SP-C
3. Decrease Product Development (NRE) and
Manufacturing (RE) costs
Effect on product price in being first to
market?
Effect on total revenue of turning out
products faster?
Effect on Cost?
Some thoughts on how to increase
profits
P=SP-C
4. Decrease Cycle Time for product Development
Assume the decision is made to invest in
developing new products
How do you make the decision on which
new product to invest in?
What are the criteria for this decision-
making process?
How do we maximize profit?
in the long range
in the short range
Portfolio Analysis
Reward
(NPV)
Risk
Game Changers
Kill
Bread and Butter
Pearls
D
C
B
A
Reward
(NPV)
Risk
Kill
Game
Changers
Bread and Butter
Pearls
A Portfolio of 6 programs
G
F
Note: area = program cost
How do you allocate?
Not by NPV and Payback Period alone
But. . .
Portfolio Balance (long/short)
Strategically Important vs Tactically Important
Product Families and Platforms
Future Sales Model
Available Resource
People and Dollars
Customers demands
Data for Rank ordered List
Project Name IRR NPV Strategic
Importance
Probability of
Technical Success
Alpha 20% 10.0 5 80%
Beta 15% 2.0 2 70%
Gamma 10% 5.0 3 90%
Delta 17% 12.0 2 65%
Epsilon 12% 20.0 4 90%
Omega 22% 6.0 1 85%
Rank Ordered by discounting
returns by probability of success
Project Name IRR NPV Strategic
Importance
Ranking Score
Alpha 16.0 (2) 8.0 (2) 5 (1) 1.67 (1)
Epsilon 10.8 (4) 18.0 (1) 4 (2) 2.33 (2)
Delta 11 (3) 7.8 (3) 2 (4) 3.33 (3)
Omega 18.7 (1) 5.1 (4) 1 (6) 3.67 (4)
Gamma 9.0 (6) 4.5 (5) 3 (3) 4.67 (5)
Beta 10.5 (5) 1.4 (6) 2 (4) 5.0 (6)
Whatever the methodology, the
choices you make have an Opportunity
Cost
Program Development Resource is always
finite
Most companies with good engineering and
marketing resource are in a target rich
environment
How expensive is it to develop the
Technology vs other choices?
Consider, allocation is a zero sum game.
An investment that ties up resource- even a
good investment (High NPV) can crowd out
a better (sometimes much better) investment

Having made your choice, you now have to
build Inventory in a Design Factory

Each has a spending (investment) profile
Each has no revenue, no profits- just a burn
rate
Each has a people (skills) resource requirement
(engineering, marketing, manufacturing, etc.)
Analogy to WIP (partly finished products in a
factory)
Requires balancing

Incorporate financial thinking into your Term
Project
What is the cost to develop Technology?
Consider price the market will pay to solve
problem the Technology addresses
Consider resources available to invest in R&D
Government
Large existing R&D functions
Strart-up Venture Capital
Consider strategic fit of Technology with
companies competence
Return on Investment
Return on Investment (RoI)
RoI is the simplest, and one of the most frequently used, measures of
financial feasibility. It delivers a percentage figure that can be
compared against prevailing interest rates, in order to assess whether
the proposed investment is financially worthwhile.
The basic formula is:
RoI = (Net Benefit / Investment) x 100
Where Net Benefit = the sum of tangible benefits Total costs,
including annual running and development costs.
Standards vary from organisation to organisation as to what period the
costs and benefits are measured. A common standard is to use the
sums of annual costs and benefits over a four-year period; another is to
use the costs and benefits over the expected life of the solution.
Standards also vary as to what RoI rate is acceptable, with values such
as twice bank base rate, or base rate plus 5% being fairly typical.
Payback Period
Payback Period
Another common measure is that of Payback Period. This is a measure
of when sufficient benefits will have accrued to cover both the initial
investment costs and the on-going running costs of the solution.
For example a project with an investment cost of 120,000, annual
running costs of 20,000, and annual benefits of 50,000 will pay back
the investment in 4 years.

In assessing overall cost benefit, measures such as RoI and Payback
Period will frequently be used in combination, and viewed differently by
different organisations.
For example some might view a RoI of 20% with a pack back of 2 years
as preferable to a RoI of 30% with a Payback Period of 4 years,
depending on their strategic aims and current financial position.


For a full description of these methods the reader is referred to a text such as Robson (1997).

1. Systems Development Costs (one-time; representative only)
Personnel:
2 Systems Analysts (450 hours/each @ $45/hour) $40,500
5 Software Developers (275 hours/each @ $36/hour) 49,500
1 Data Communications Specialist (60 hours @ $40/hour) 2,400
1 Database Administrator (30 hours @ $42/hour) 1,260
2 Technical Writers (120 hours/each @ $25/hour) 6,000
1 Secretary (160 hours @ $15/hour) 2,400
2 Data Entry clerks during conversion (40 hrs/ea @ $12/hr) 960

Training:
3 day in-house course for developers 7,000
User 3 day in-house course for 30 users 10,000

Supplies:
Duplication 500
Disks, tapes, paper, etc. 650

Purchased Hardware & Software:
Windows for 20 workstations 1,000
Memory upgrades in 20 workstations 8,000
Mouse for 20 workstations 2,500
Network Software 15,000
Office Productivity Software for 20 workstations 20,000

TOTAL SYSTEMS DEVELOPMENT COSTS: $161,670
2. Annual Operating Costs (on-going each year)
Personnel:
Maintenance Programmer/Analyst (250 hrs/year @ $42/hr) $10,500
Network Supervisor (300 hrs/year @ $50/hr) 15,000

Purchased Hardware & Software Upgrades:
Hardware 5,000
Software 6,000

Supplies and Miscellaneous items 3,500

TOTAL ANNUAL OPERATING COSTS: 40,000

-----------------------------------------------------------------------------------------------------------

TOTAL COST TO DEVELOP AND OPERATE THE SYSTEM: $201,670
==========
Fewer processing errors
Increased throughput
Increased response time
Elimination of job steps
Reduced expenses
Increased sales
Faster turnaround
Better credit
Reduced credit losses
Reduction of accounts receivables
TANGIBLE BENEFITS
Equate these
to Dollars ($)
Improved customer goodwill
Improved employee morale
Improved employee job satisfaction
Better service to the community
Better decision making
INTANGIBLE BENEFITS
Equate these
to Dollars ($)
BREAK EVEN (PAYBACK) ANALYSIS
Year 0 Year 1 Year 2 Year 3 Year 4 Year 5
Development Costs (161,670) - - - - -
Operational Costs - (40,000) (40,000) (40,000) (40,000) (40,000)
Tangible Benefits - 50,000 55,000 60,000 65,000 70,000
Intangible Benefits - 20,000 25,000 30,000 35,000 40,000
Benefit (Cost) (161,670) 30,000 40,000 50,000 60,000 70,000
Cum Benefit (Cost) (161,670) (131,670) (91,670) (41,670) 18,330 88,330
* This simple example does not consider the Time-Value of Money
Break Even (Payback) Analysis Example*
Cum Benefit (Cost)
(161,670)
(131,670)
(91,670)
(41,670)
18,330
88,330
(200,000)
(150,000)
(100,000)
(50,000)
-
50,000
100,000
150,000
0 1 2 3 4 5
Cum Benefit
(Cost)
Assumptions/Calculations:
The ideal pump produces 0.5HP as determined by our calculations

Calculations were based on an ideal impeller pump

Average Annual Costs are constant

Pump Maintenance Technicians cost $18 per hour

Interest rate is 4%

Centrifugal Pump maintenance is a percentage of the initial cost
plus the cost of a Maintenance Technician
Pump Replacement
Axial Pump
Model: 607-3


Initial Cost: $4400
Maintenance /
year: 6 to 10 hrs labor
Pump
Maintenance
Technician: $18 per hr
Total Yearly
Cost: $100
Centrifugal Pump
Model: 8000 Series
Horizontal Centrifugal
Self-Priming Pump
Initial Cost: $2464
Maintenance /
year: $400
Diaphragm Pump
Model: LLC-1010


Initial Cost: $2399
Maintenance /
(9/12) Year $284 Repair Kit
$100 Technician
Total
Maint/Year $512
Piston Plunger Pump
Model: 150 Frame
Reciprocating Process Pump --
152R060

Initial Cost: $61500


Maintenance
/ year: $108 Oil / year
$270 Oil / case
$1500 Seal Kit
$180 Technician
Total Annual
Costs: $1790


Our Decision
Carry Manufacturings Axial Flow Pump
(Model 607-3) is the most cost effective
model for our application.
This holds true even when:
APR = 6%
APR = 2%

Economic Analysis
Centrifugal Axial Piston Plunger Diaphragm
Initial Cost 2464 4400 61500 2399
Yearly Costs 400 100 1790 512
400 100 1790 512
400 100 1790 512
400 100 1790 512
400 100 1790 512
400 100 1790 512
400 100 1790 512
400 100 1790 512
400 100 1790 512
400 100 1790 512
Total NPW (4%) $5,584.54 $5,180.86 $75,461.06 $6,393.02
Organizational Feasibility
If we build it, will they come?
Strategic alignment
How well do the project goals align with
business objectives?
Stakeholder analysis
Project champion(s)
Organizational management
System users
ETHICAL CONSIDERATIONS

How do you identify all those who are or may be affected by the project?

Who is the client?

How do you evaluate community impact (cost and/or benefit)?

What effects will the new project pose to the environment?

What is the most appropriate land use? The most efficient use of materials,
of energy?
Goals and success criteria of project
management
The project is on time
The project is run in cost-effective manner
The resources are used efficiently
Project outcome is verified and ready for validation
Customer is satisfied with the project and its
outcome
Project team members are satisfied with the project
and its outcome
Project management - needed knowledge
scope management
time management
cost management
quality management
resource management
integration management
communication management
risk management
subcontracting management
problem management
processes and work methods
leadership skills
Thank you for
your attention !