1.1 Introduction
Feasibility and viability studies are systematic evaluations conducted to determine the practicality, profitability, technical soundness, and sustainability of proposed projects before implementation (Kerzner, 2022). These studies assess whether a capital project is worth undertaking by examining key factors such as cost implications, resource availability, risk exposure, environmental impact, and expected returns. In project management practice, feasibility and viability studies serve as foundational tools for informed decision-making, ensuring that only projects with acceptable levels of success probability are approved for execution (PMI, 2021).
Capital project development refers to the structured process of planning, financing, executing, and completing large-scale infrastructure or investment projects intended to deliver long-term socio-economic benefits (Meredith & Mantel, 2019). In Nigeria, capital projects often include road construction, housing schemes, energy projects, and public infrastructure developments, which are critical to national growth and development. However, the success of such projects is largely dependent on the quality of preliminary assessments conducted before project commencement.
The importance of feasibility and viability studies in capital project development cannot be overstated, as they help to minimize project failure, reduce wastage of public funds, and improve project performance outcomes. Despite their relevance, many projects in Nigeria still experience delays, abandonment, and cost overruns due to inadequate or poorly conducted feasibility and viability assessments (Adebayo, 2020).
As a prelude to other parts of this study, this chapter will discuss the background upon which this study was initiated, the statement of problems that led to this study, the aim and objectives of the study. Others are significance of the study, scope of work, research hypothesis and questions, limitation of the study and definition of terms.
1.2 Background of Study
The concept of feasibility and viability studies in capital project development has its roots in classical project management and engineering economics, where early decision-making frameworks were designed to assess whether proposed investments were technically achievable and economically justifiable before execution. Project Management Institute (PMI, 2021) stated that feasibility and viability assessments form the foundation of successful project initiation, as they reduce uncertainty and improve alignment between project objectives and organizational goals. In the same vein, Meredith and Mantel (2019) affirmed that project feasibility studies assist managers in identifying potential constraints such as financial limitations, technical inadequacies, and environmental risks that may hinder successful implementation. These early evaluations are essential in minimizing project failure and enhancing resource optimization.
In Nigeria, capital project development has continued to face significant challenges, particularly in the areas of planning inefficiencies, cost overruns, and project abandonment. According to Adebayo (2020), a large proportion of public infrastructure projects fail to meet their intended objectives due to weak pre-project evaluation processes. He further contends that inadequate feasibility and viability studies often result in unrealistic budgeting and poor project structuring, which ultimately affect project outcomes. This situation reflects a broader systemic issue within the Nigerian construction and public investment environment.
Ojo and Musa (2021) reported that many capital projects in Nigeria suffer from inadequate risk assessment and poor financial forecasting, which are directly linked to insufficient feasibility and viability analysis at the planning stage. Corroborating this assertion, Ibrahim (2019) stated that institutional weaknesses and limited technical capacity within public agencies contribute to the poor implementation of project appraisal standards. These shortcomings often lead to misallocation of resources and failure to achieve value for money in public investments.
Building on this perspective, Turner (2020) asserted that effective feasibility studies enhance project success rates by providing decision-makers with reliable data on cost-benefit relationships and implementation risks. Likewise, Williams (2021) contended that viability analysis ensures that projects are not only feasible at inception but also sustainable throughout their life cycle. These viewpoints emphasize the importance of integrating both technical and financial evaluations in capital project development.
Consistent with this view, Okeke and Nwosu (2022) affirmed that the absence of rigorous feasibility and viability assessments in Nigeria's public sector projects has contributed significantly to infrastructure decay and abandoned projects. They observed that many projects are initiated based on political considerations rather than empirical analysis, which undermines project sustainability. Correspondingly, Smith (2020) reported that in developed economies, feasibility and viability studies are institutionalized and form part of mandatory approval processes for capital investments. In contrast, Nigeria's project environment still struggles with inconsistent application of these tools, leading to inefficiencies in project execution.
Along the same line, Johnson (2021) contended that the success of capital projects depends heavily on the accuracy and reliability of feasibility and viability studies conducted at the early stages of project development. He emphasized that inadequate assessments often result in scope creep, budget overruns, and delayed completion timelines. Furthermore, Brown (2020) stated that sustainable project development requires continuous alignment between feasibility findings and implementation strategies to ensure long-term value delivery.
This study is set against the backdrop of the need to critically analyze the impact of feasibility and viability studies on capital project development in Nigeria.
1.3 Statement of Problems
Investigation revealed that many capital projects in Nigeria continue to suffer from poor planning and weak preparatory studies, particularly in the areas of feasibility and viability assessment, leading to inefficient resource allocation and project failures (Adebayo, 2020). In several cases, projects are initiated without adequate technical, financial, and environmental evaluation, resulting in abandonment, cost escalation, and delayed completion. It was further investigated that inadequate feasibility and viability studies contribute significantly to unrealistic project projections, weak risk assessment, and poor investment decisions in capital project development (Ojo & Musa, 2021).
Furthermore, many public projects in Nigeria exceed initial budgets or fail to deliver expected benefits due to insufficient early-stage analysis, which undermines accountability and value for money in project execution (Ibrahim, 2019). It is against this backdrop that this study seeks to analyze the impact of feasibility and viability studies on capital project development in Nigeria.
1.4 Aim and Objectives of Study
The aim of this study is to analyze the impact of feasibility and viability studies on capital project development in Nigeria. In achieving this aim, the following specific objectives were laid out as follows:
- To examine the effect of feasibility studies on the planning of capital projects in Nigeria.
- To assess the influence of viability studies on the successful implementation of capital projects in Nigeria.
- To determine the impact of feasibility and viability studies on project cost control.
- To evaluate the relationship between feasibility and viability studies and timely project completion.
- To examine the contribution of feasibility and viability studies to the overall success of capital projects in Nigeria.
1.5 Research Questions
The study came up with research questions so as to be able to ascertain the above stated objectives. The specific research questions for the study are stated below as follows:
- What effect do feasibility studies have on the planning of capital projects in Nigeria?
- How do viability studies influence the successful implementation of capital projects in Nigeria?
- What impact do feasibility and viability studies have on project cost control?
- What relationship exists between feasibility and viability studies and timely project completion?
- How do feasibility and viability studies contribute to the overall success of capital projects in Nigeria?
1.6 Research Hypotheses
In order to pursue the objective of this study, the following generalized statements have been designed to guide and aids in obtaining the result for the experiment to be conducted. For this work, the null hypothesis will be represented with H0 while the alternative hypothesis will be represented with hypothesis H1.
Hypothesis One
- H0: Feasibility studies have no significant effect on the planning of capital projects in Nigeria.
- H1: Feasibility studies have a significant effect on the planning of capital projects in Nigeria.
Hypothesis Two
- H0: Viability studies have no significant influence on the successful implementation of capital projects in Nigeria.
- H1: Viability studies have a significant influence on the successful implementation of capital projects in Nigeria.
Hypothesis Three
- H0: Feasibility and viability studies have no significant impact on project cost control.
- H1: Feasibility and viability studies have a significant impact on project cost control.
Hypothesis Four
- H0: There is no significant relationship between feasibility and viability studies and timely project completion.
- H1: There is a significant relationship between feasibility and viability studies and timely project completion.
Hypothesis Five
- H0: Feasibility and viability studies do not significantly contribute to the overall success of capital projects in Nigeria.
- H1: Feasibility and viability studies significantly contribute to the overall success of capital projects in Nigeria.
1.7 Significance of Study
It is believed that at the completion of the study, the findings will provide empirical information on the role of feasibility and viability studies in improving capital project development in Nigeria. The findings will also assist organizations in understanding the importance of conducting comprehensive feasibility and viability assessments before project execution.
Furthermore, the result obtained from this research will provide data that support informed decision-making in project investment and implementation.
Lastly, the study will serve as a useful reference material for researchers and scholars interested in project planning and development. It will also contribute to existing literature on project management and capital project development in Nigeria.
1.8 Scope of Study
This study focuses on the analysis of the impact of feasibility and viability studies on capital project development in Nigeria. The study will be conducted using projects undertaken by the Federal Ministry of Works. It covers the influence of feasibility and viability studies on project planning, implementation, cost control, project completion, and overall project success within the period 2020 to 2025.
1.9 Limitations of the Study
During the course of this study, there were some problems encountered which stood as limitations to the research work. Some of the limitations include:
- Delays in obtaining information from respondents also affected the pace of data collection.
- Financial resources available for the study were limited, while the time allocated for conducting the research was relatively short.
- Lastly, the study was limited by difficulties in accessing some relevant project records and documents required for comprehensive analysis.
1.10 Definition of Terms
Feasibility Study:
A feasibility study is a systematic assessment conducted to determine whether a proposed project is technically, economically, legally, operationally, and environmentally achievable before implementation (Kerzner, 2022).
Viability Study:
A viability study refers to the evaluation of a project's ability to generate sufficient benefits and sustain operations over time while meeting financial and organizational objectives (Meredith & Mantel, 2019).
Capital Project:
A capital project is a large-scale investment project involving the construction, acquisition, or improvement of physical infrastructure and assets intended to provide long-term benefits (PMI, 2021).
Project Development:
Project development is the process of transforming a project idea into a completed and operational project through planning, design, financing, execution, and monitoring activities (Burke, 2020).
Project Planning:
Project planning refers to the process of defining project objectives, activities, schedules, resources, and budgets necessary for successful project execution (PMI, 2021).
Project Cost Control:
Project cost control is the practice of monitoring project expenditures and implementing measures to ensure that project costs remain within the approved budget (Kerzner, 2022).
Project Implementation:
Project implementation is the stage during which planned project activities are executed to achieve the intended project objectives and deliverables (Burke, 2020).
Project Success:
Project success refers to the achievement of project objectives within the specified scope, budget, quality standards, and completion time while satisfying stakeholder expectations (PMI, 2021).
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