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Feasibility Analysis

Nupul KukrejaSupannika Koolmanojwong

23rd September 2013

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Agenda• Possibility vs. Feasibility• Feasibility Analysis (What/Why?)• Types of Feasibility Analysis (How?)– Business Feasibility– Technology Feasibility– Operational/Process Feasibility

• Risk Assessment and Feasibility Analysis• Various Levels of Feasibility Analysis

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Possibility vs. Feasibility“Everything is possible given enough

time and money”• Usually not enough time or enough money • Businesses exist for making a profit – along

with creating jobs, fun, social responsibility etc. Primary purpose – profit $$

• Time and money are precious and businesses must decide if they are “worth spending” on something before actually spending it!

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Feasibility Analysis – Why?• Must know what is doable within given constraints –

best bang for the buck• Not everything is “feasible” with respect to the

constraints

• Must know “how much”, “when” and “where” to spend time and/or money (optimum not always possible. Thousands of unknowns!)

Constraints

Feasible Region

Region of Possibility

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Feasibility Analysis – Why? (Cont’d)• A commercial customer specified a natural language interface for an

otherwise simple query system. The project was cancelled after the natural language interface caused a factor-of-5 overrun in project budget and schedule

• A commercial customer specified a project to fully digitize a set of corporate records via scanning and optical character recognition. The resulting cost escalated by a factor of 10 after if was discovered that the records included many hard-to-capture tables, charts, and graphs.

• A government customer specified a 1-second response time for an extremely large transaction processing system. Meeting this requirement involved a custom architecture and a $100M project. The customer authorized a prototyping activity, which determined that 90% of the transactions needed only 4-second response time. With this performance requirement, a commercial-technology-based solution was achieved for $30M

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Feasibility Analysis/Study* – What?• Feasibility studies aim to objectively and

rationally uncover:– The strengths and weaknesses of an existing

business or proposed venture– Opportunities and threats as presented by the

environment– The resources required to carry through – And ultimately the prospects for success

• Cost vs. Benefits – simplest criteria to gauge feasibility

*Taken from: http://en.wikipedia.org/wiki/Feasibility_study

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Feasibility Analysis – When?• Generally done before initiating project or technical

development (usually continues towards end of SDLC)

• Need to look at various aspects of the “problem” to ascertain feasibility

• Common Factors to look at: TELOS*– Technology Feasibility – is it technically possible?– Economic Feasibility – can we afford it? Profitable?– Legal Feasibility – is it legal? – Operational Feasibility – how well is problem solved?– Schedule Feasibility – is it doable in given time?

*Taken from: http://en.wikipedia.org/wiki/TELOS_(project_management)

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Feasibility Analysis – Other Factors• Depending on the type/scope of feasibility

analysis various other factors may be analyzed– Industry & Market Feasibility– Management Team (is the team capable of

executing the project)– Cultural Feasibility– Resource Feasibility– Financial Feasibility– Real Estate Feasibility etc.

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Feasibility Analysis – Output• Usually a “Yes/No” decision backed by

evidence/rationale for decision• Provides “level of confidence” in executing the

project and not a guarantee of success• Feasibility Analysis is based on “estimates”

which in turn should be based on prior available data or through prototyping

• Project may be declared “infeasible” after uncovering details of a prior “feasible” decision

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Feasibility Analysis in 577

• Provide Feasibility Evidence Description ascertaining:– Business Feasibility: Perform Cost vs. Benefits analysis to gauge

viability of concept– Technology Feasibility

• Architectural Feasibility:– Level of Service Feasibility – how does the design satisfy LOS requirements?– Capability Feasibility – how does design satisfy/cover capability requirements?– Evolutionary Feasibility – (how) is the design capable of satisfying evolutionary

requirements?• NDI/NCS Interoperability – how well do the NDIs/NCSes interoperate?

– Process Feasibility: Why follow a particular process and how does it help with execution?

– Schedule Feasibility: Is the project sufficiently scoped to be doable within 1-2 semesters? (COCOMO, WinWin, prototyping)

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Feasibility Analysis – How?

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Business Feasibility• Perform Return on Investment (ROI) Analysis

based on costs/benefits of project (i.e. program )

• ROI = f(cost, benefits*)– Analyze ‘cost’ factors– Analyze ‘benefits’– Conceptually if: Benefits/Cost > 1 Feasible

• But where do the costs/benefits come from?

*benefits ≡ revenue

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Assumptions: Under what assumptions is this model true?

Program Model – Costs/Benefits

Stakeholders(Who)

Initiatives(What)

Value Propositions(Why)

Beneficiaries(For Whom)

•Who/what resources are required for ‘executing’ the initiatives•Do you need to

‘partner’ with another department or organization?•Do you need to hire

anyone?

•What are the key activities that must be done to for delivering/ realizing the value propositions/ benefits?

•Why undertake this project/ program?•What are the

value propositions you seek to satisfy/serve? •What are the

goals?

•Who derives value from the project/program? (Usually the customers or end users; can also be project sponsors)

Costs (How much) Revenue (i.e. Benefits) (How well)•What are the costs involved in executing

this program? Eg.: Personnel Costs, Hardware/Software Costs, Office Rental, Equipment/infrastructure etc.

•Against what metrics will you track the benefits delivered? (Derived as a result of MEDIC-ated value propositions)

Assumptions• Growing needs of volunteers• Continuously growing volunteer pool• Increasing activities requiring more volunteersStakeholders

(Who)Initiatives

(What)Value Propositions

(Why)Beneficiaries(For Whom)

Developers Maintainer IIV & V Volunteer Volunteer

Coordinator Supervisor

Develop new volunteer management system

Create web application outreachDevelop improved volunteer

management process outreachProvide training for new job

management processDeploy job management processSetup work stations for volunteer

use

Improved Productivity

Faster volunteer management and less person-to-person time

Improved volunteer management process

Volunteers Volunteer

coordinator Supervisor

Cost BenefitsDevelopment Costs, Maintenance Costs, Maintainer (admin hire), Web Server (hardware), Web Hosting, Oracle License etc.

Decreased:Application Data EntryTime sheet data entryJob request timeJob assignment time

Increased volunteer applications

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Ascertaining Feasibility of Program• Use Costs, Benefits of the Program Model to

perform an ROI Analysis• The costs are estimated on the items listed in

the ‘cost box’• Benefits are estimated based on those listed in

the ‘benefits’ box• Compute ROI…

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Computing ROI• In 577 ROI computation is w.r.t. Effort

expended (cost) vs. Effort saved (Benefits)• Capture Costs (C) as ‘Time Spent’ (except

where things were purchased/hired)• Capture Benefits (B) as ‘Time Saved’• Time can always be converted to money (and

vice versa )• Compute ROI = Net Benefits/Cost

ROI = (B – C)/C

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Visualizing ROI

Saved

Effort (or Cost)

Spent

Time

Breakeven pointTotal Cost = Total Benefits

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Computing Costs

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Computing Benefits

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Computing ROIYear Cost

(hours)#Benefit(hours)+

Cumulative Cost

Cumulative Benefit ROI*

2013 425 0 425 0 -1

2014 156 762 581 762 0.31

2015 172 762 753 1,524 1.02

2016 190 762 943 2,286 1.42

2017 210 762 1,153 3,048 1.64

# : Assuming 10% per yr increase in cost. Rounded up+ : Benefits rounded up to nearest integer* : ROI = (Cumulative Benefit – Cumulative Cost) / (Cumulative Cost)

It’s okay to round off decimals – these are just estimates and 23.54 hours of effort is not better than 23 or 24 or 25 hours

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Plotting ROI

2013 2014 2015 2016 2017

-1.5-1

-0.50

0.5

11.5

2ROI

YearBenefit Realization only after transition: - Mid 2014 for 2 semester projects - Early 2014 for 1 semester projects

In reality, economic analyses are more prevalent:http://greenbay.usc.edu/csci577/fall2013/uploads/readings/ep/Economic_Analyses_-_CBA_Break-even_Paybay_and_NPV.xls

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WorkshopProblem Statement

USC needs an online course reservation system to automate the registration process and to use the registration data to understand which courses to offer when, to improve their overall course offerings thereby increasing quality of the program

• Get together in your teams and create:1. Program Model with Cost/Benefits2. Estimate the costs and benefits per year3. Compute ROI for 3 years

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Assumptions: Better course offering/quality increases enrollment/fundingStakeholders

(Who)Initiatives

(What)Value Propositions

(Why)Beneficiaries(For Whom)

•Developers•Maintainers•Data Experts/

Course Designers• Faculty/

Advisors

•Develop System•Training (System usage

and Information analysis)•Course/Enrollment

Analysis•Program Outreach•Maintain/update system•Discuss course offerings

with current students

•Automate registration process Saves time•Better course offerings Increased enrollment• Increase program

quality Increased Alumni Funding

•Students•Advisors•Faculty•Course

Designers

Cost (How much?) Revenue/Benefits (How well?)

Problem StatementUSC needs an online course reservation system to automate the registration process and to use the registration data to understand which courses to offer when, to improve their overall course offerings thereby increasing quality of the program

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Technology Feasibility1. Architecture Feasibility– LOS Feasibility Techniques:• Analysis• Detailed references to prototypes• Models• Simulations

– Capability Feasibility: Explicitly state/show how design satisfies capability requirements

– Evolutionary Feasibility: Explicitly state/show how design satisfies evolutionary requirements (if any)

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Technology Feasibility2. NDI/NCS Interoperability• Various different NDI/NCSes may be used

to satisfy the operational concept• Need to check if they can seamlessly

interoperate– Plug and Play instead of Plug and Pray

• Usually a manual effort by going through documentations and architecture and by prototyping to see if glue code required

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Process Feasibility• ICSM for 577 typically has 4 ‘sub process models’– Architected Agile (develop from scratch)– NDI Process (Shrink-wrapped software; minor customization

possible; may have missing functionality)– NDI Intensive ( 30% of features provided by NDI; remaining ̴

effort in appraising features)– Net-Centric Services (Almost all functionality provided by

online services with some customization)• Need to provide rationale stating which process was

chosen and why• (How) Will the process help deliver the operational

concept within budget/schedule?

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Risk Assessment and its relation to Feasibility Analysis

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Risk Assessment• Feasibility analysis only helps put estimates on

the costs/benefits to ascertain expected ROI• Various environmental factors can jeopardize

project execution and delivery– Risks: Things that have a possibility of occurring in the

future and may negatively impact outcome of project– Problem: Risk which has occurred or something that

will happen with 100% probability• Necessary to identify, analyze, prioritize and

come up with mitigation plans if risk occurs

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Risk Management/DocumentationRisks

Risk ExposureRisk MitigationsProbability

of Loss*Magnitude

of Loss*Risk

Exposure

Need to synchronize with another team for delivering capability. High communication overhead.

8 9 72

-Setup a fixed schedule of meeting frequently and try to raise all the problems that most likely to occur.- Fixed meetings for synchronizing and finalizing architectural interfaces

* Scale: 1 – 9 (1: lowest, 9:highest)

Risk Exposure (RE) = Probability of Loss x Magnitude of Loss(Risks prioritized using RE score)

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Continual Feasibility Analysis

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Various Stages of Feasibility Analysis• Feasibility Analysis is NOT a one time activity• The granularity of the analysis changes when

progressing through the project• Continually conducted as more details are

uncovered during execution• A previous “feasible” decision might as well

become “infeasible” later down the road• Feasibility Evidence required at every anchor-

point milestone in ICSM

The Incremental Commitment Spiral Model (ICSM)

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Trivia: All Estimates Are Wrong • If all estimates are wrong they why bother doing

feasibility analysis?• Estimates must be based on experience, judgment

and past data (if possible) to be of any value. You’ll still be wrong

• It’s the thought process that counts to help ascertain the odds of success

• Increases confidence in the solution being provided (or outcome of project/program)

• Shows if the team has thought through the potential pitfalls and their readiness in dealing with them

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Key Takeaways• Feasibility Evidence is an absolute must to verify optimistic

claims made by developers (and other business people too )

• Always get into the habit of asking “prove it” rather than saying “believe me”

• No “idea” can come to fruition unless its feasibility has been ascertained to prove with sufficient confidence that it’s indeed worthwhile (ROI)

• There is NOT enough time/money to do everything and hence it’s necessary to know what’s feasible

• Out of the ‘multiple’ feasible options choose the one(s) that are feasible and have the best bang for the buck

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Online Resources• Tools/Documents available on class website:

Greenbay.usc.edu – Course Readings• Electronic Papers

1. Business Case Analysis Guidelines (MS Word™)2. Business Case Analysis Workbook (MS Excel™)