13. ECONOMICAL FEASIBILITY

The bottom line in many projects is economic feasibility.

1. During the early phases of the project, economic feasibility analysis amounts to little more than judging whether the possible benefits of solving the problem are worthwhile.

2. As soon as specific requirements and solutions have been identified, the analyst can weigh the costs and benefits of each alternative.

3. This is called a cost-benefit analysis

Cost/Benefit Analysis

1. The purpose of a cost/benefit analysis is to answer questions

such as:

a) Is the project justified (because benefits outweigh costs)?

b) Can the project be done, within given cost constraints?

c) What is the minimal cost to attain a certain system?

d) What is the preferred alternative, among candidate solutions?

2. Examples of things to consider:

a) Hardware/software selection

b) How to convince management to develop the new system

c) Selection among alternative financing arrangements (rent/lease/purchase)

d) Difficulties -- discovering and assessing benefits and costs; they can both be intangible, hidden and/or hard to estimate, it's also hard to rank multi-criteria alternatives.