Feasibility Studies: Feasibility Study
Discover How Shorace will ensure that YourFeasibility Study is
the best possible response to the Opportunity or Problem that
You have probably arrived at this web page because you need
to do a Feasibility Study on
a Problem or Opportunity. Or you may have been told to do a feasibility study by
your boss – because he hasn’t got a clue how to do
The first thing that you have to do is make sure that you don't
waste your time by looking at loads of old studies that were
badly done and that will just mislead you. Because many of these – in
fact most of them will be a waste of your time because all that
you need to do is to understand the simple basic principles that
must underly every Feasibility Study.
Then if you can write reasonable English and can understand
spreadsheets you can produce a Feasibility Study that
will be a highly bankable document. One word of warning though
- many studies will need some research or surveys carried out
by technical experts. If you cannot avoid this then I can show
you how to minimise the cost of these studies.
OK So You have an Opportunity that can
make you a lot of money and need a document that shows that
your brilliant idea will work
What does the Feasibility Study document
need to include?
The most important thing to understand is that
every successful project must be carried through a series of
steps - This is illustrated in the following graphic.
Every successful project MUST go through these stages of project
development if it is to be successful.
In Step 1 You must identify and clarify
every Aspect of your Objective
In Steps 1 and 2 You must show that your
idea WILL work.
Steps 3 and 4 You must show HOW to make
In detail there is a lot more to it - but in principle
you now have all that you need to know how to carry out a successfulfeasibility study.
You will find that most Feasibility Studies
will need to include the documents for Steps 1, 2 and 3. In Shorace
Step 1 - Shell
Step 2 - Optionology
Step 3 - Refinement
The Project is then completed through Steps 4 and
Step 4 - Accordance
Step 5 - Execution
One important thing to bear in mind is that the idea, problem
or opportunity is not actually costing anything at the moment
that the project is conceived.
However, the minute that anyone starts to develop the
idea, project development costs start to build up.
And – Most importantly – at every project
stage – from 1 to 5 – every stage will cost several
if not many times the previous stage.
So every stage must be planned and carried out as perfectly
as is possible with the resources available so that if the
project is a dud – it is cancelled before any more money
is wasted on it.
I am going to say that to you again in different words so that
you thoroughly understand the principle. The thing is that although
you may have had a good idea
IN PRACTICE YOUR GREAT IDEA MAY NOT WORK!!
Because it may not work you owe it to yourself and everyone
involved in the project to prove that it won't as quickly and
as cheaply as possible
A Feasibility Study is
like a 3 Obstacle Race
So your feasibility study is
like a 3 obstacle race where the obstacles get much bigger
and higher at every stage. And the documents produced at every
stage must be that much better and more detailed than the documents
from the previous stage to enable the project to move on to
the next stage.
This very basic principle is ignored by just about every single
educational institution on the planet – probably because
most of the people that teach at these places have never really
dealt with a live project.
Be warned that there are some projects where it is imposssible
to do a Feasibility Study.
How would you undertake a Feasibility Study to
build and race a Formula 1 racing car for example? In this case
the answer is that you can’t because the data required
to substantiate the study is not available
unless you “do a McLaren” and buy it form a disgruntled
Ferrari team member – of course there is a then a little
matter of a $100 million fine!
What about a new hotel – Yes this is easy and straightforward
because all the required data will be available from local sources
and public data that is held on similar projects.
So when you have a brilliant idea and decide to carry out a Feasibility Study the
first thing that you need to consider is the availability of
the data that will be needed to get your study through
the first 3 project stages illustrated in the graphic above
Will Feasibility Study samples
or examples help?
The answer to this is that a well researched Feasibility Study Sample
or Example may demonstrate some of the processes involved. But
so many studies have basic flaws that it is dangerous if you
rely on previous studies for guidance.
So this is what Shorace is all about – it
is a simple, easy to understand, short-cut to the production
of Feasibility Studies of the highest
The Shorace Story
My name is Will Witt and I have been doing feasibility studies
for nearly all my working life as a professional civil engineer.
Every working engineer knows that studies must be undertaken
before money is spent on a project. The trick is to spend the
money wisely. It is also a basic fact that the more knowledge
that you have before starting a project the more likely it is
that the project will be a success.
On the other hand if you know very little about your project
and just launch out into it, it is virtually certain to fail!
Ok let’s carry on with the Shorace story – How did
it all come about.
My First Feasibility Studies were
in the 1970's
Well I did my first feasibility studies
in the 1970’s – mainly on ports, quays and industrial
My very first feasibility study was
for a coal merchant that wanted to reorganize his coal storage
facilities and the yard for his trucks. I suppose the result
was inevitable – I knew nothing about handling coal and
the project sponsor did not provide an adequate brief. So the
documents that I produced were worthless and my firm at the time
had a job getting paid for the work. Even then it was obvious
that project Feasibility Study Briefs
are a bit like computers – if you input crap – you
get crap as output.
I did lots more studies over the next few years and gradually
developed enough skill and experience to actually advise clients
on how to write their Feasibility Study Briefs.
Feasibility Study is
a total misnomer!!!
You may have been told that you must do a feasibility study.
But you do not want to know if a particular concept is feasible
- You know that already.
What you really want to know is - what do I need
to do to answer the question;
"Will this project produce Sufficient
Return on the Investment of my Time and Money to make it worth
If you look at my biography on the "Meet Will
Witt" page you will see that I have spent most of my working
life doingFeasibility Studies and Master
Plans (A special sort of Feasibility Study).
Throughout my working life I have wondered about
the term "Feasibility Study" and
the misunderstandings that result from the way it is used. This
page tells the story of how an alternative approach can be used
that produces a much better ROI - or will tell you at an early
stage that the project is not viable.
Very Large Projects working as a Consultant
I worked for 10 years as a specialist consultant, on very large
projects, to one of the biggest and most infamous engineering
construction company called KBR (Kellog Brown & Root) between
1995 and 2005. It was then owned by Halliburton the company where
the the US vice-president Dick Cheney was CEO.
Frequent discussions on the Scope of Feasibility Studies
Because of the frequency that Requests for Proposals (RFP) for Feasibility Studies
passed across my desk I was constantly in discussion with the
other "Gurus" in KBR on what should and should not
be included in these proposals.
Every RFP was different showing that great uncertainty existed
throughout the industry on what should be included or excluded
from a feasibility study.
Millenium Project Failures
It was about this time that all the Millenium Projects were
There was great hilarity around the office when we heard the
latest industry horror stories about the Millenium Dome, The
Portsmouth Spinnaker and the many other projects funded by the
UK lottery that were a disgraceful waste of the publics money.
By the way I exclude the Eden Project and the London Eye as
they have both been outstandingly successful - it shows that
it can be done by good project managers.
"Missing Link" in the Project Development Process
As this went on I became more and more intrigued by the
apparent "Missing Link" from the early stages of project
inception and development.
It was strange because the construction industry is studied
to death by academics and researchers but there is very little
published literature on actually how to get a new project up
One of the leading Oil Companies Project Development
Then by pure coicidence l was introduced to a highly, focussed
systematic project development process that had been developed
by one of the major oil companies in the late 1990's.
It was designed to overcome problems that the oil company had
been having with the development of its own projects. It was
developed and put into operation at great cost - but it worked
We scoffed at it to start with
Very experienced engineers always scoff at all new ideas and
I was very sceptical about it to start with. There was a lot
of mickey taking about all this weird jargon that the oil industry
guys were using and imposing on us.
It was simple concept that involved;
- Identification of a project framework
- Systematic identification and analysis of alternative ways
of achieving the project objectives
- Repeated testing of the project's viability at each Step
- The deployment of a project communication plan
Although the concept is simple, implementation is complex because
of the number of issues involved. As I used it more and more
over a two year period I realised that it was a very powerful
tool that would lead to better projects if properly deployed.
The "Eureka" moment!
This was a "Eureka" moment for me because I quickly
realized that the approach could have been used in just about
every project that I had ever been involved with.
I could not do much with the idea at the time because of the
pressure from the projects that I was working on.
The Core Element of Shorace
The core element of Shorace that sets it apart from the conventional
approach to feasibility studies is
the systematic identification and analysis of alternative ways
of achieving the project objectives.
What is it that makes this so important?
The answer lies in the following ration;
1 : 5 : 200
I know that you could ask hundreds of construction
professionals what this ratio represents and they would not
It is never 100% accurate but it is a rough
relationship between the following;
Capital Cost : Total Operating Cost :
Total Salary Costs of the building occupants
In other words, even after discounting is taken
into account your ROI will be predominantly determined by the
productivity of the people that will work in the project, partially
determined by Opex and not affected at all by the Capex.
So the only way to maximise your ROI is to examine
every available alternative and tune the better options based
on your NPV analysis.
If you are reading this and you are experienced
in Feasibility Studies you will know
that the study of the alternatives
is predominantly carried out in a very ad hoc way during a process
that is often called a "Pre-feasibility study"
It is no wonder that so many projects
go badly wrong!
The Development of SHORACE
I have now have now developed Shorace into a system that can
be used for all types of engineering and construction projects.
I have called it SHORACE an ancronym derived from the names
that I have given to the first 4 steps of project development
followed by the Execution Stage.
It is not a Panacea
To be frank it is not a panacea that will make a bad project
manager a good one.
It is just a framework that will encourage a good project manager
to produce the goods - a high ROI - or an early recommendation
to close the project before any more money is wasted.
The underlying principle is that you develope your a Stage at
a time and test your project against the yardsticks laid down
during the 1st Stage.
Your project must past each test or the yardsticks need to be
changed - and the senior management must be consulted about such
Readers and Your Problems
If you are reading this I expect that you have a project to
develop - many readers will be new to the whole concept of project
inititiation. Many more will be brushing up on their techniques
because if my experience is anything to go by many will be very
uncertain as to how to tackle their problem.
The Problems involved in getting a Project started
You are probably;
Confused by the massive amount of conflicting advice and
information on how to even start and what is this thing called
a "Feasibility Study" that
everyone keeps on about
Perplexed by the difficulty of actually getting started
Concerned by possibility that you might spend a lot of time
and money and not get value for it
Uncertain as to what the Scope of the project should be
Worried about how much it is going to cost
Frustrated because you seem to be going round in circles
Anxious about the risks that might be involved
Nervous about personal responsibility for the project
Terrified that it will be disaster project that massively
overruns budget and schedule
The SHORACE process can deal with all these issues.
What is SHORACE?
It is a project inception and execution process that concentrates
on all the main issues that are germane to the project At
the Appropriate Stage During the Project Development Process
In other words you will not be committed to massive spending
on all kinds of special surveys and investigations until they
are absolutely necessary and more importantly
"You Know What You Need To Know"
and not what some self-interested consultant tells you what
Back to the Shorace Story
Founding partner of Robert West and Partners
I was a founding partner of Robert West and Partners in the
1970’s and undertook the feasibility studies
on such projects as the West Bank container terminal at Ipswich
Port which is still in operation as well as the infrastructure
for the Lakeside shopping centre and the adjacent retail warehouse
complex on the old Tunnel Cement works site in Thurrock, alongside
the northern M25 approach to the Dartford Crossing.
Robert West Consulting is also still in business today. Have
a look at www.robertwest.co.uk
Pentacon Design and Construction
I then set up a new type of UK business called Pentacon that
did studies, engineering consultancy as well as construction.
This was an entirely new approach in the Uk in the 1980’s
and was very successful for a while.
I did the studies on work to a total value of approximately £60.0m
between 1985 and 1990 for a variety of major blue chip clients.
This included being "The Engineer" for the infrastructure
of the suburb of Chafford Hundred at West Thurrock in Essex.
This project was a tough one. It involved feasibility studies
and master planning of roads, drains, utility services, railway
station, schools and shops, on 5000 hectares of abandoned quarries,
for a new suburb of 10,000 people - all undertaken over a 5 year
period in close conjunction with Thurrock Borough Council.
All the housing has now been built and occupied and it is now
a thriving community. Just search for Chafford Hundred in Google
and you will see.
I also did the feasibility studies,
and designed and built offices, warehouses and industrial units
for a large variety of developer, retailer and manufacturing
clients throughout the UK during that time.
I was also the developer of the Palmerston Business Park in
Fareham, Hampshire. In Spring 1990 it was valued at $20m and
6 months later $10m - and the bank pulled the plugand then sold
it all on at a massive profit - I have never trusted banks since!
This was my first setback and it was a big one! I had given
personal guarantees to the banks and was eventually forced into
personal bankruptcy in 1992. I got divorced at the same time
- what a year!
This was during the big construction recession of the 1990's
and so I bought myself some tools and started building house
extensions and garages etc - and taught myself to do all the
building trades. I enjoyed the work - but not working outside
in the UK winter!
Working as a consultant to KBR on the Biggest Projects in the
In the mid 1990's the construction industry started to pick
up again and so I abandoned the builder's tools and started to
work as a consultant to Kellog Brown and Root (KBR) - back in
the oil and gas business that I had worked in during the 1970's.
Working at KBR turned into a fantastic opportunity and for 10
years I was involved with some of the biggest projects in the
- Flood protection projects for London Underground - stopping
the threat of the River Thames getting into the Underground
- The Darwin to Alice Springs railway in Australia
- The giant Tengiz onshore oil-field in Kazakhstan
- The D154 nuclear refueling facility project at Plymouth dockyard
- The massive Kashagan offshore oil-field in the Caspian Sea
- Master plans for two $10 billion + gas based industrial estates
with their own ports, power plants and aluminium smelters in
Sohar, Jordan and in Darwin, Australia
- Various LNG export facility projects of up to 2 $billion
- New Dry Docks at Richards Bay in South Africa
Thinking "Outside the Box"
At KBR I was always involved in the master planning and feasibility study stages
because of my wide experience, statistical analytical ability,
enthusiasm and inclination to think "Outside of the Box"
Where Shorace began
During the 10 years with KBR I started to take a very active
interest in the theory and practice of feasibility studies
and began to increasingly realise that it was a discipline that “Had
Virtually every study brief that
I saw was dreadful:-
- The study objectives were rarely
spelt out and never clearly
- The Project Sponsors team were poorly led and gave conflicting
advice and instructions
- Budgets were nonsensical
- The necessary pre-study documents were
- The project documentation was incoherent
- The Project data was inadequate, inconsistent and incoherent
- Surveys had been commissioned that were a total waste of
- Further surveys were required when the budget had already
been spent on useless surveys
Then – one day – I received a request for a proposal
to do some feasibility study work
from one of the major international oil companies. The request
included quite a bit of jargon that I had never heard before
and a comprehensive set of back-up documentation that was very
coherent and inclusive.
I was quite impressed with the logic and coherence of the documentation
- but like all very experienced professionals - my colleagues
and I scoffed at all the jargon. But over a period of time I
began to realise that the jargon was necessary to describe an
entirely new approach to project feasibility studies
that actually seemed to work!
Over a period of three years I did a lot of work for this particular
oil company and got thoroughly immersed in the method that they
were using to manage project development. There were quite a
lot of procedures that were unique to the particular oil company
and the oil business and to be honest quite bureaucratic – but
the system itself was fundamentally very sound.
I have now taken the basic system underlying the oil companies
method and have developed it into Shorace. Shorace is based entirely
on the principles of the oil companies system but heavily adapted
for the current needs of engineering and construction development
The Old Obsolete Methods of Feasibility Study Production
Feasibility Study Jargon
You may need some help in understanding some of the Jargon that
is in common use in Project Development at the moment. I have
included the following information to help in your study of
other Feasibility Studies that you
will come across. Just be warned that most of them will be very
poor documents but the following notes should help you understand
the various terms that are in common use..
Economic Feasibility Analysis and
Most Feasibility Projects require
Technical Feasibility, Operational Feasibility,
Economic Feasibility and FinancialFeasibility Reports
that are brought together for Analysis in one (supposedly) coherent
This document and the presentation material that is derived
from is often used to present the Feasibility Report
to backers and funding organizations such as banks and development
agencies like the World Bank or the EBRD (European Bank for Reconstruction
The Feasibility Report is also used
as the key document for persuading both Internal and External
Stakeholders to back the Project.
The Project Study or Report Study as
they are sometimes known are documents that can vary in size
from 10 sheets of paper up to many volumes of detailed drawings,
maps and tables. However the purpose of the document is always
the same. That is, it is designed to provide all the germane
information that any potential project investor might need.
Feasibility Study Terminology
in Different Industries
Many industries use different terminology for the various aspects
involved in a Feasibility Report or Feasibility Study.
The one common factor in all these approaches is that it is
invariably a staged approach. This is always necessary because
the cost of a Feasibility Study or Feasibility Report
can be quite large even for a comparatively small study.
So the staged approach is essential to allow the project to be
cancelled or abandoned, as soon as it is apparent that it does
not work, to minimize unnecessary costs.
If you examine the following table it will become obvious why
so much confusion exists as professionals are always moving between
Construction, Investment Planning and the Oil and Gas.
Feasibility Study Terminology
in Different Industries
Oil and Gas Terminology
Front End Engineering Development
Asset Creation Design and
Detailed design and construction
Asset Creation and Operation
Construction and Operation
Technical Feasibility or Technical Study
As its name suggests this is a study that
concentrates on technical feasibility of
a project and may be necessary to make sure that a technical
innovation works before undertaking a full-blown Feasibility Study.
Market Feasibility or Market Study
A Market Feasibility Study is
one that concentrates on the size of the market for the product
or service involved and may be necessary to make sure that the
prices that can be charged for the product or service are realistic
before undertaking a full-blown Feasibility Study.
This term is normally restricted to the construction industry
but is also used occasionally in the Oil and Gas Industry. It
invariably involves the different Alternatives or Options that
can be used to achieve the Project Objectives.
Business Feasibility Study
In this type of study the resources
of the sponsoring business may be limited and the Feasibility Study is
concentrated on the management capacity of the Sponsor.
Alternatively the Technical and Market Feasibility may
have already been confirmed and the Feasibility Study is
then restricted to Business Aspects such as the Forecast ROI
(Return on Investment) or NPV (Net Present Value)
Feasibility Study Proposal
or Proposal Study
Sometimes managers decide whether to proceed with a Feasibility Study by
commissioning Proposals from Consultants to see whether the Consultants
know more about their Business than they do. Needless to say
this is very bad pratice!
Example or Sample Feasibility Studies
Many Project Managers look for these document so that they can
use them as crib sheets for their own Feasibility Study orFeasibility Studies.
This is really quite unnecessary as if the Easy to Follow Shorace
Approach is used then all the various parts of the study and
the documentation fall into place quite naturally.
With Shorace You don’t need to worry about
all this Jargon
Just follow the simple steps outlined in Shorace
and you can create your own FeasibilityStudy without
worrying about what all this jargon means.