Lesson 1, Topic 1
In Progress

1.17. Support suggestions for changes by a clear rationale as to how they could improve the quality of the system

ryanrori February 1, 2021

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Feasibility analysis guides the organisation in determining whether to proceed with a project. Feasibility analysis also identifies the important risks associated with the project that must be managed if the project is approved. Each organisation has its own process and format for the feasibility analysis, but most include techniques to assess three areas: technical feasibility, economic feasibility, and organisational feasibility. The results of evaluating these three feasibility factors are combined into a feasibility study deliverable that is submitted to the approval committee at the end of project initiation.

An economic feasibility analysis (also called a cost–benefit analysis) attempts to answer the question “Should we build the system?” Economic feasibility is determined by identifying costs and benefits associated with the system, assigning values to them, calculating future cash flows, and measuring the financial worthiness of the project. As a result of this analysis, the financial opportunities and risks of the project can be understood.

Tangible benefits include revenue that the system enables the organisation to collect, such as increased sales. In addition, the system may enable the organisation to avoid certain costs, leading to another type of tangible benefit: cost savings. For example, if the system produces a reduction in needed staff, lower salary costs result. Similarly, a reduction in required inventory levels due to the new system produces lower inventory costs. In these examples, the reduction in costs is a tangible benefit of the new system.

Assess and clearly state the reliability of assumptions and judgements made

Assumptions and judgements that are misunderstood, not validated, and poorly managed will likely lead to havoc. History is replete with examples of assumptions that were neither tested and validated nor balanced with a branch plan to execute if the assumptions prove incorrect. 

RAND defines an assumption as “an assertion about some characteristic of the future that underlies the current operations or plans of an organisation.” There are several types of assumptions. Include implicit and explicit assumptions, and primary and secondary assumptions, an important aspect of Critical assumption planning. The two classifications are not mutually exclusive; an assumption can be both explicit and primary.

Explicit assumptions are assumptions of which the intention is fully revealed or expressed without vagueness, implication or ambiguity. However, explicit statements in a plan often have hidden implicit assumptions. Implicit assumptions are assumptions that are not expressed and may go undetected. If implicit assumptions prove to be wrong, this can damage projects.

Examples of implicit assumptions:

  • Customers will buy our product because we think it’s a good product
  • Customers will buy our product because it’s technically superior
  • Customers will agree with our perception that the product is “great”
  • The product will sell itself
  • Distributors are desperate to stock and service the product
  • We can develop the product on time and on budget
  • Competitors will respond rationally
  • We will be able to hold down prices while gaining share rapidly
  • We will have no trouble attracting the right staff
  • Customers will run no risk in buying from us instead of continuing to buy from their past suppliers

Making assumptions sets benchmarks that are often revisited during the project to aid the project team in staying within scope, on time and within budget. But what happens when assumptions are wrong? This is where risk comes into play.

Once you’ve built your scope and made certain assumptions, you’ll want to begin assessing areas of risk. Risk is the same in project management as it is in the real world; it is a hazard or chance that can create damage. All projects contain risk and if you are the project manager or project owner, it’s not only your responsibility to anticipate risk but it’s also your job to communicate the potential impact of those risks to the project. 

First and foremost, risk comes in various degrees. Sometimes risk can just mean the project will run slightly differently or take a small unexpected turn. In some cases, however, risk can lead to catastrophic results that can turn your project on its head.