Economics and Project Feasibility Study

Distinguish economic perceptions of business organisations as clients/sponsors, professional advisors (independent practice), and contracting organisations

•    Distinguish the economic perceptions of business organisations as clients/sponsors, professional advisors (independent practice), and contracting organizations.
•    Reconcile the different economic perspectives relevant to demand, supply, costs and revenues and the operation of markets.
•    Articulate a broad awareness of economics and project economics nomenclature.
•    Develop your skills in recommending appropriate strategies for effective financial control in competition / collaboration; public/private sector interactions, and in the interpretation of economic data for resource forecasting.
•    Develop and reinforce the ethical characteristics of a Northumbria graduate as you consider the values that underpin ethical approaches to project feasibility and justification. You will have the opportunity to reflect on how these are linked to your own values.

 

Over the 12 weeks of lectures and seminars, you have learned about a range of concepts, techniques and methods for performing project appraisal and feasibility studies (Figure 1). These cover the whole project lifecycle of projects from the Concept phase through Development to Operation and Termination (see Figure 2). These concepts, techniques and methods helps you understand: (1) the different facets of feasibility including financial, economic, environmental, and social feasibility; (2) the different economic environments surrounding projects including, macro and micro environments, and regulatory/legal environments; and finally (3) stakeholder environments including the Sponsor, Professional, and Contracting environments. You will use your understanding of these technique to develop a feasibility study as detailed in Section 3.3 (Part I).

You have also learned about contemporary aspects and practices in project Feasibility and Economics. Academic staff with the participation of industry guest speakers will deliver these talks and engage in discussions around these practices in weekly seminars. You may draw upon these talks or the further information provided and discussions held during the seminars. There are also a number of specialised and peer reviewed journals such as: “International Journal of Project Management”, “Project Management Journal”, “Research in Economics”, “Construction Management and Economics”, “International Journal of Managing Projects in Business”, “Journal of Construction Engineering and Management”, among many other sources that will support your knowledge and understanding.  

 

You may also identify available industry-wide guides published by professional bodies (e.g. Association of Project Management) and industry associations (e.g. Major Projects Association). Finally, you may select a theme from the ‘collated list of topics’ addressed by previous years’ students and included hereafter. You will use your selected topic to develop a literature review as detailed in Section 3.3 (Part II).
•    Investigating the value for money of Private Finance Initiative in a selected sector (e.g. health, transport, infrastructure, energy from waste) using the Public Sector Comparator (PSC) method.
•    Appraisal and selection of renewable energy sources using life cycle based decision making approach under uncertainty
•    Assessing the economics and feasibility of a selected public sector project (transport, health, etc.) with particular emphasis upon the social feasibility. 
•    A thorough investigation of risk factors in infrastructure projects procuring under the Private Finance Initiative.
•    Contractor Liquidity Evaluation Model for Successful Public Housing Projects.
•    Prioritising Renewable Energy solutions (solar, wind, hydro) using the Analytical Hierarchy Process (AHP) within the economic and social environment of a selected country.

Reconcile different economic perspectives relevant to demand, supply, costs and revenues, and the operation of markets

•    Assessing the economic, social and environmental feasibility of a major [infrastructure, health, etc.] projects.
•    Insights into the legal feasibility aspects in construction: is arbitration still relevant in contemporary construction sector? 
•    Analysing and assessing techniques for cost modelling for contingency pricing in Engineer to Order (ETO) Projects.
•    The importance of project feasibility in the successful implementation of sustainable and socially responsible of projects within a selected sector (e.g. health, transport, social, etc.)
•    Evaluation of wind and solar energy investments in a selected country.

 

Part I - Project Feasibility Report (50% of total)
The report will be based on specific characteristics of a real world project. You will select your own project. A recommended source is The World Bank database of projects but you may use other sources. In many instances, the original project brief may not contain all the information you may require to perform your analyses. You may often need to develop your own assumptions. When you make assumption, please make sure they are grounded and realistic. You must clearly indicate your assumptions using rectangles entitled ‘Assumption’ throughout your project report. 

You are free to select a project of any type from this database or other databases. It is advised that you select a completed project as they provide richer documentation and information, but this is not mandatory. You are free to change any aspect of the project specification(s) to make the project relevant to the project’s feasibility and economics techniques that you intend to apply. For example, you can arbitrarily change aspects such as available budget, location of the project, the type of the stakeholders involved, and the intended benefits. You can also decide to focus on a specific work-package or component of a large project or exclude scope that is out of interest.  

To apply the range of techniques and methods over the whole project lifecycle, you are very likely required to assume the role of different stakeholders’ types across the project report. For example, at the very early Concept stage you may play the role of a Sponsor interested in assessing the financial health of the organisation/consortium undertaking the project or some of its specific parts; at the Definition phase, you may play the role of a Professional Service provider who will perform the appraisal of the project options to the client/sponsor; at the Development phase, you may play the role of a Contractor interested in delivery aspects (cost, schedule, and their control); during procurement and assuming that Private Finance Initiative is adopted, you may play the role of a public sector client interested in understanding the contract structure, the risks, and the value of money. You are required to clearly indicate the stakeholder perspective for each analysis you present in your report. 

Articulate a broad awareness of economics and project economics nomenclature

The aim from providing this flexibility in adapting the project brief and your role is to enable you to challenge your knowledge of Project Feasibility and Economics while working on a suitable case for the application of the concepts, techniques and methods discussed in lectures and seminars. The project’s report will have three Sections (A, B, C) as described hereafter.  

 

In this section, you are required to summarise using a table the project specifications and global assumptions made at project level. You may make further specific/local assumptions when you apply different methods and techniques as the project/report progresses but these specific assumptions should be placed under their corresponding parts and not in Part A. The purpose of this part is to provide the setting/background for all the subsequent parts of the report. This project specifications part should address, but is not limited to: 
•    General project information (e.g. name, value, timescale, location, etc.)
•    Project briefing information (e.g. objectives, scope, critical success factors, etc.)
•    A list of main stakeholders (e.g. client, funders, sponsors, etc.)
•    Macro environment surrounding the project (e.g. political, economic, social, technical, environmental, legal aspects)

 

Section B. Feasibility and Economics Analyses of the selected project (1400 to 1600 words)
In this section, you are required to apply various feasibility, appraisal and economics analyses of the project, analyse and discuss the findings. You are expected to have a sub-section for each type of analysis performed. Sub-sections should be numbered B1, B2, etc. and each should be given a representative title. You are required to address ‘most’ (or at least six) of the techniques, methods and concepts covered during the 12 weeks (see Figure 1) and you are free to apply further techniques you have learned independently. A very good source for further related guidance and techniques is the HM Treasury’s Green Book You are required to explicitly state the assumptions (using rectangles entitled Assumption) and the stakeholder role (e.g. client, contractor, etc.) you are undertaking when applying each individual technique or concept. 

At the start of Part B, you should include a table summarising the list of techniques, methods and concepts applied throughout part B and the stakeholder role undertaken. Following the application of each technique, method or concept you are required to critically analyse and evaluate the findings. Whenever possible, support your work with a clear theoretical rationale, academic references, relevant data and references to project specifications.  

Integration among the different parts and sub-parts is important. You should endeavour to develop a comprehensible storyline/narrative and show links between the different sections/sub-section. As an example of a link between two parts is when you take forward the best project option you identified at the concept (e.g. through performing an appraisal study) into the development stage (e.g. assess schedule feasibility / plan budget for the selected project option).