ECON 310S Economic Analysis of Law

Investments in information technology (IT) have become crucial for firms to advance the quality of their products and services. Due to the restricted resources and time, companies should wisely select to invest in the projects that fit their business and economic goals. Hence, the feasibility study is a vital part during the planning phase of the system development life cycle (SDLC).

One of the feasibility factors that needs to be assessed is economic feasibility. Management can measure economic feasibility by doing the cost-benefit analysis, as well as using financial techniques, such as time value of money or break-even point analysis. Economic assessment is a critical part of investment appraisal, dealing with factors that can be quantified, measured, and compared in monetary terms.

Often, this economic analysis carried out during the project identification and selection phase of the systems development life cycle is rather cursory.

What are your views on this?

Economic feasibility is an important aspect of the organization, which helps them in dealing with the costs and benefits that are associated with the implementation of system development life cycle of the firm (Vesi?-Vasovi?, 2014). Various techniques are associated in order to analyse the economic feasibility of the organization that would help them in getting a clear view regarding the financial statements of the firm. It is very important for the firm to analyse its economic feasibility in the planning phase of the development program itself.

Analysing the economic feasibility of an organization is considered beneficial when done during the planning phase of the system development life cycle. When the analysis is done in the project identification or the selection phase of the program, there might be various hindrances that a firm might overcome in the procedure. During the planning phase of the development program, the firm get a clear view of its resources and limits within which it would select the project and conduct the program. If the economic analysis were conducted during the selection phase, discrepancies would prevail in the economy due to unplanned and unstructured resource utilisation process (Dixon, 2013). The firm might plan for the selection of a project that would be beyond its capabilities or might lead to lesser benefits and greater form of costs.

It could be concluded from the above argument that it is considered as beneficial on behalf of the organization, when it analysis its economic feasibility during the planning phase of the development program. It provides the firm with enough possibilities to understand its limitation and future prospects in order to undertake a well-planned project for execution and business of the firm.

References

Dixon, J., Scura, L., Carpenter, R., & Sherman, P. (2013). Economic analysis of environmental impacts. Routledge.

Vesi?-Vasovi?, J., Radoji?i?, M., Neši?, Z., & Mihailovi?, ?. (2014). Possibility of choosing development investment programs of a production company by applying discounted investment appraisal technique. Journal of Engineering Management and Competitiveness (JEMC), 4(1), 41-46.