The Greenfield project means that a work which is not following a prior work. In infrastructure the projects on the unused lands where there is no need to remodel or demolish an existing structure are called Green Field Projects.
Economic Cost Benefit Analysis- Cost-Benefit Analysis (CBA) is an analytical tool for judging the economic advantages or disadvantages of an investment decision by assessing its costs and benefits in order to assess the welfare change attributable to it. The steps involved in the investigation of a project’s net impact on economic welfare are:
1. Observed prices or public tariffs are converted into shadow prices that better reflect the social opportunity cost of the good
2. Externalities are taken into account and given a monetary value
3. Indirect effects are included if relevant (i.e. not already captured by shadow prices)
4. Costs and benefits are discounted with a real social discount rate
5. Calculation of economic performance indicators: economic net present value (ENPV), economic rate of return (ERR) and the benefit-cost (B/C) ratio
Risk measurement:
1. Sensitivity analysis (identification of critical variables, elimination of deterministically dependent variables, elasticity analysis, choice of critical variables, scenario analysis);
2. Assumption of a probability distribution for each critical variable;
3. Calculation of the distribution of the performance indicator (typically FNPV and ENPV);
4. Discussion of results and acceptable levels of risk;
5. Discussion of ways to mitigate risks.
Market feasibility study: At the early stages of a Greenfield project, a Conceptual Study is done to analyze the possibilities and benefits of a potential project. The next step, a Pre-feasibility study, is usually carried out ahead of a Feasibility Study to provide an economic assessment of a project which has already been determined to have a high potential of development.
As the name implies, a feasibility study is used to determine the viability of a project. The objective of such a study is to ensure a project is legally and technically feasible and economically justifiable. A feasibility study evaluates the project’s potential for success.
Four Areas of project feasibility-
1. Technical Feasibility
2. Legal Feasibility
3. Financial Feasibility
4. Scheduling Feasibility
Add Your Comments