Feasibility Analysis for a Software Project

lumpysteerSoftware and s/w Development

Dec 2, 2013 (3 years and 8 months ago)

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Feasibility Analysis

for a Software
Project

Dr. Pedro Mejia Alvarez

Seccion de Computacion, CINVESTAV
-
IPN

Feasibility Analysis


“A measure of how beneficial or practical the
development of a
software
system will be to an
organization. This analysis recurs throughout
the life cycle.”


Feasibility Checkpoints

Production

System

Technical

Design

Business

Requirements

Existing System

Planned Project

Planning

Support

Implementation

Design

Analysis

“creeping commitment approach”

Feasibility Checkpoints


systems analysis
--

study


urgency? rough cost estimate


systems analysis
--

definition


clearer scope, refined cost estimate


systems design
--

selection


adjust scope, schedule, costs


systems design
--

procurement


option check before letting contracts


systems design
--

detail design


one last chance to cancel or downsize

Production

System

Technical

Design

Business

Requirements

Existing System

Planned Project

Planning

Support

Implementation

Design

Analysis

Feasibility Analysis


T
echnical


can system be developed?


O
perational


can organization absorb the change?


E
conomic


what is business justification?


S
chedule


can system be implemented in time available?

Production

System

Technical

Design

Business

Requirements

Existing System

Planned Project

Planning

Support

Implementation

Design

Analysis

Technical Feasibility


Is the technology or solution practical?


Do we currently possess the necessary
technology?


Do we possess the necessary technical
expertise?

People



Technology


Operational Feasibility


Is the problem worth solving?


Will the solution to the problem work?


How do the end
-
users and managers feel
about the problem (or solution)?

People



Schedule Feasibility


Can the project deadlines be met?


What will it cost to accelerate development?

People



Economic Analysis


Cost estimates


acquisition or development costs


operation and maintenance costs


Benefit estimates


tangible benefits


intangible benefits

Estimating Costs


acquisition or development (one time)


operation and support (ongoing)



in these expense categories


personnel hours


computer usage


media and supplies


equipment and software

Estimating Acquisition Cost


Shop the Vendors (informal)


Request for Proposal (RFP)


Request for Quote (RFQ)

Estimating Development Cost


break project up into tasks


estimate SDLC tasks independently


use life cycle cost model


e.g., 1
-
3
-
3
-
3 model


take advantage of analogy/experience


how much have similar projects cost?


calculate function point metric


estimate “size” of project from inputs, outputs, etc.


apply productivity rate

Estimating Operation and Support


client/user personnel


technical personnel


media and supplies


equipment and software support


repair


enhancement

Estimating Tangible Benefits


reduced costs


manual operations


computer operations


programmed decisions


increased revenue


new services


differentiated product


faster delivery


better quality


larger market share

Estimating Intangible Benefits


information quality


precision


timeliness


integration


presentation


job satisfaction


participative design


job enrichment


improved tools


external standing


responsiveness


corporate image

Economic Analysis (continued)


traditional capital planning techniques apply


payback analysis


return on investment


net present value

Payback Analysis


determines how long it will take for accrued
benefits to overtake accrued and continuing
costs


most companies want quick payback


3
-
5 years is typical

January 1996

Return on Investment (ROI)


determines the lifetime profitability of different
investments


ROI = (benefits
-

costs) / costs)


Annual ROI is common measure

%

Net Present Value (NPV)


determines the lifetime profitability of different
investments


NPV = discounted benefits
-

discounted costs


Preferred technique in many organizations

Feasibility Matrix

Characteristics
Option 1
(mainframe)
Option 2
(surround)
Option 3
(client server)
Technical
Low risk,
No problems
Moderate risk,
Some IS staff
are ready
High risk,
IS staff needs
more training
Operational
Strong user
resistence
High user
acceptance
High user
acceptance
Economic
(NPV)
(Payback)
$220,000
2.5 years
$180,000
3.2 years
$320,000
3 years
Schedule
Jun 95
Aug 95
Oct 95
Benefit Profile Chart

(for documenting intangibles)

Some
Improvement
Significant
Improvement
New Benefit
Better
Communication
x
Current Market
Information
x
Better
Teamwork
x
Higher User
Satisfaction
x