The Purpose Of Feasibilities Studies

The purpose of a feasibility report will depend on the type of property development that you are undertaking.  What do you mean by property development?  This may appear an easy statement to define – but looking in greater depth there are many types of projects that can be classed as a property development.

The markets for residential and commercial are clearly very different but you need to break it down further, so answering the following questions will give you the overriding purpose under which to conduct a feasibility study:-

• what is the type of property proposed?
• where is it located?
• why are you building – for rental or sale?
• who will be your end user?
• when will the project be completed?
• how are you sourcing your finance?

The purpose of your project-specific property development feasibility study is to address the answers to these questions, review the pros and cons and provide the analysis to determine the financial viability.

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The Main Purpose Of A Feasibility Study For Building Construction Before Embarking On A Project

The main purpose of a Feasibility Study is to gain a financial appraisal to determine whether the project is feasible. You need to assess the value of the land or property, the practicality of a proposed design, the estimated costs for the build, the possibility of costly delays in the schedule, strategies for achieving sales projections, and the repayment terms of the investment finance.

You are then in a position to review the proposed property development in the light of your commitments on other projects, your cash flow, your financing costs and your projected profit to make a decision as to whether to proceed.

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Cost vs. value

Value of completed buildings minus (all) development costs minus (all) land costs = PROFITABILITY

Our focus is to create the right balance between value and cost. Our intention is to enhance function and quality whilst reducing or eliminating unnecessary costs thereby creating a cost-benefit.  By either adding value and decreasing costs, or both, you will naturally increase the profitability.

An example of adding value for a new build construction in London, our Kisiel Design team worked closely with the Metropolitan Police to achieve a Gold Award on their Secured by Design initiative on recent development.  As this significantly reduced the opportunity for crime and anti-social behaviour, with low-cost implications, this was a real cost-benefit for the developer when marketing the properties.

Creating the right balance between cost and value is the ultimate aim to give the maximum performance for a good return on investment.

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