P20SC102: CONSTRUCTION MANAGEMENT
Project feasibility
Dt. 19-01-2021
Faculty: Dr. M.B. Sushma
Syllabus
UNIT – I
• Elements of Construction Management: Stages of construction project,
Construction team and their functions, Functions of construction management,
Project feasibility studies - Technical, Financial, Economic and Ecological analysis,
Steps in planning, Principles of planning, Stages of planning
• Construction Contracts and Specifications: Considerations in contract, Contract
documents, Types of contracts – Lump-sum, Cost-plus fixed fee, Cost-plus bid fee,
Guaranteed maximum, negotiated, Unit price, Design build, Turn-key,
Specifications, Types of specifications
UNIT – II
• Project Planning and Scheduling: Methods of scheduling, Network techniques,
Activity, Event, Critical Path Method (CPM), Program Evaluation and Review
Technique (PERT), Time estimates, Floats and Slacks
• Time and Cost Relationship: Direct and indirect cost of project, Total project cost,
Optimization of project cost through contraction - cost slope and crashing of
activities, Basics of resource allocation, Leveling and Smoothing
Syllabus
UNIT – III
• Project Planning & Control: Changes in project plan, Rescheduling activities,
Changes in duration of an activity, Methods of updating, Data required for
updating
• Management of Construction Equipment: Need for mechanization, Financial
aspects of plants and machineries, Factors affecting the selection of equipment,
Factors affecting the cost of owning and operating the construction equipment
UNIT – IV
• Construction Economics: Economic analysis of construction projects,
Economic studies – Primary Economic comparisons, Break-even analysis;
Time-based studies – Cash flow forecasting, Investment appraisal, Sensitivity
Analysis
• Valuation Engineering: Cost and Value, Purpose of valuation, Factors
affecting the value of property, Valuation classification, Sinking fund,
Capitalized value, Obsolescence, Depreciation, Valuation of land and property
Textbooks :
• [1] S. Seetharaman, Construction Engineering and
Management, 5th ed. New Delhi: Umesh
Publications, 2017. (Chapters 2-10, 13, 14, 15,17,18,23
and 25).
• [2] B. L. Gupta, Construction Management, machinery
and accounts, 3rd ed. Standard Publishers 2016.
(Chapters 1, 2, 3, 5-12 and 15).
Reference Books:
• [1] K. N. Jha, Construction Project Management –
Theory and Practice, 3rd ed. Noida: Pearson India
Publishers, 2016.
• [2] L. S. Srinath, PERT and CPM principles and
applications, East West Press, 2011.
• [3] Subhajit Saraswati, Construction Technology,
Oxford University Press, 2017.
Project Feasibility Studies
• Feasibility analysis is used to determine the viability of an
idea, such as ensuring a project is legally and technically
feasible as well as economically justifiable.
• https://www.Simplilearn.Com/feasibility-study-article
• https://www.Cdmg.Com/building-faqs/feasibility-studies-
for-construction-projects
• For ex: requiring too many resources, which not only
prevents those resources from performing other tasks but also
may cost more than an organization would earn back by
taking on a project that isn’t profitable.
Need of Feasibility Study
Feasibility studies are preliminary studies that are undertaken in the earliest
stages of a project to address and clear up doubts and address difficulties
related to the proposed plans.
A well-designed and well-planned project feasibility study should determine:
Whether or not the project is viable
What site remediations need to be made in order to complete the project
If another location would be better suited
Feasibility studies vary based on the complexity, size, and circumstances of
each project
Need of Feasibility Study
• The growth and recognition of project
management training have changed
significantly over the past few years, and
these changes are expected to continue and
expand. And with the rise of project
management comes the need for a feasibility
study.
• It tells us whether a project is worth the
investment—in some cases, a project may
not be doable.
Project feasibility
Report
• It is prepared at the initial stage of the
project.
• The project can be implemented as per
the techno-economic stipulations made
in the feasibility report.
• Thus, the PFR is prepared to present an
in-depth techno-economic analysis
carried out on the projects and content
results of technical as well as
economical evaluation of the projects so
that the owner can take investment
decisions and the project can be
properly planned and implemented.
Types of Feasibility
Study
Technical Analysis
Economic Analysis
It evaluates the project’s
Financial Analysis potential for success;
therefore, perceived
objectivity is an essential
factor in the credibility of the
study for potential investors
Ecological Analysis and lending institutions.
Technical Feasibility
• It identifies alternative methods of course of action
and the selection of best available technology.
• It helps organizations determine whether the technical
resources meet capacity and whether the technical
team is capable of converting the ideas into working
systems.
• It also involves the evolution of the hardware,
software, and other technical requirements of the
proposed system.
• Ex: An organization wouldn’t want to try to put Star
Trek’s transporters in their building, this project is not
technically feasible.
Technical Feasibility
The most important objective of technical feasibility is locating
suitable site for construction, to meet the target to time and cost.
It is necessary that the site has been properly selected and
implementation as well as completion of the project should be in
time.
Criteria for site selection
a) Availability of land, soil characteristics and cost of land
b) Approach to site
c) Transportation and availability of material
d) Availability of man-power
e) Availability of other facilities such as water supply,
electricity, drainage, etc.
f) Acceptance of the project by the local bodies
Financial Analysis
i. Estimation of capital cost requirement
ii. Source of financing
Cost incurred during the completion of a project is termed as
capital cost.
The main elements of a capital cost estimates as a fund plan, such
as:
• Engineering and project management cost
• Lump sum payment for technology cost
• Engineering fee
• Management and supervision during construction
• Working cost & operating cost
Financial Analysis
Source of Financing:
There are two sorts available for
financing the fund requirements of
a project
i. Internal source (used for small
projects) and external source
(used for large projects)
ii. The capital cost of the project
will require to be financed
basically through equity and
long-term debts.
Economic Analysis
It is required at the time of feasibility
stage of the project.
The economic feasibility of a project can
be assessed by:
• Pay Back period Method
• Return or Investment method
• Net present value method
• Internal rate of return method
• Benefit cost ratio method
Ecological analysis
In recent years, environmental concerns have
assumed a great deal of significance.
This analysis is done particularly for major
projects which have significant ecological
implications.
Pollution control laws are becoming
stringent.
During feasibility study, the guidelines of the
central or state pollution control boards are to
be considered and the cost suitable treatment
scheme should be considered.
Ecological analysis
• Geologic Hazards
• Hydrogeological Investigation
• Environmental Impact
Assessment (EIA)
Geologic Hazards
Information can be used to mitigate any known hazards and reduce
future risks such as:
1. Active faulting and fault rupture potential
2. Seismic hazards
3. Potential earthquake magnitudes and expected ground accelerations
4. Slope stability problems
5. Flooding and Inundation
6. Liquefaction
7. Lateral Spreading and Slope Stability
8. Expansive Soils
9. Subsidence and other risks
Hydrogeological Investigation
An investigation to evaluate hydrogeological conditions and the
movement of groundwater through soil media at your site will
help to determine constructability given your specific
groundwater conditions, monitoring results, and other needs.
Hydrogeological studies identify groundwater conditions for the
following:
• Water resource potential
• Design construction dewatering
• Assessment of hazards related to slope stability and
liquefaction potential
Generation of Ideas
Preliminary Initial Screening
No
work
Is the idea Promising Terminate
Yes
Plan feasibility analysis
Contract Technical analysis
Analysis
Conduct financial analysis
Conduct Economic and
Ecological analysis
Evaluation
No
Is the project worthwhile Terminate
Yes
Prepare funding Proposal
Benefits of feasibility Study
Helps to identify any constraints the proposed project may
face, including:
Internal Project Internal External
Constraints: Corporate Constraints:
Technical, Constraints: Logistics,
Technology, Financial, Environment,
Budget, Marketing, Laws, and
Resource, etc Export, etc. Regulations, etc.
Benefits of feasibility Study
Provides valuable information for a “go/no-go” decision
Enhances the success rate by evaluating Identifies new
multiple parameters opportunities
Identifies a valid
Aids decision-
Improves project reason to
making on the
teams’ focus undertake the
project
project
